Back in 2006 I hired someone to perform some professional services. He was small businessman running a limited liability company, came with good references and was recommended by some people that I trusted.

We agreed on a $2,000 month-to-month retainer to do some marketing work. I paid him the first month’s two grand, he cashed my check and then disappeared. Vanished.

So here are some things I learned from this experience.

Trust is crucial. I do business based on looking someone in the eye and shaking their hand. You can’t do business without taking risks. Trust is a big factor in my decision making process, and this experience won’t change that fact.  But it does emphasize the importance of having a rock solid contract, and an organized file of every check that you’ve paid for services. A great convenience of today’s internet banking world is the fact that you can easily log on, click on a payment, and print out a front-and-back copy of the endorsed check. This guy took me for a ride, but I archived the paper trail and stayed prepared for round two.  This ain’t over.    You can’t sue someone you can’t find. That was the big hangup in this case. I got all the prep work done to take my flaky business partner to court, but have never been able to serve him with papers. Don’t give up. The statute of limitations in Texas for civil cases is a leisurely four years. That’s an eternity. Take your paperwork and seal it in a file for safe keeping. And periodically take a look around – the creep might show up.  Even though you’ve written off the loss it doesn’t cost you anything to stay on the trail.  Assume you’re going to court, prepare accordingly, and be ready to win. Once you track the guy down, hit him with a cool, well organized declaration explaining how you’re about to sue him back to the stone age. The other guy may be lazy and dishonest (which is why he stole from you in the first place) but chances are that he’s neither stupid nor insane. If you have your ducks in a row then nine times out of ten the guy will see the light and pay up before he suffers the indignity of being dragged into court.  The small claims court process isn’t difficult. If you’re savvy enough to buy and sell houses then you’re savvy enough to manage a small claims court case (up to $10,000 in Texas). Go get a brochure from your courthouse and follow the instructions.

Continue reading Stay on the trail of dishonest contractors

Ethics in investing is a topic that I’m interested in. This is one that I’ve written about before, both in the press and here in this blog . It’s one that I don’t think gets enough airplay – but the lessons of ethics and investing are the subplot to many of the other ideas and strategies that I write about on this blog.

Here are five discrete thoughts that have emerged from experiences that I’ve written about recently.

Honest investors are fearless investors: I have a lot of philosophical reasons for being honest, but I also have a practical one: Continue reading Smart investors are ethical investors

Absorption Rate is defined as: An estimate of the rate at which a particular classification of space - such as new office space, new housing, new condominium units and the like - will be sold or occupied during a specific time frame.

This is an important number for Buyers because it gives you a general ideal of the market conditions in a given area. Equally important for Sellers as it is a good indication, (when used in conjunction with our pricing grid) of what to expect in terms of “Days on Market”. Higher rates are an indicator of better market conditions.

2/2007 through 2/2008

Continue reading Colorado Springs Real Estate Absorption Rates For Feb. of 2008

The real estate industry and Wall Street have been reeling of late, obsessed with the number of U.S. foreclosures and portraying the information as a catastrophic event which is unrecoverable in the foreseeable future. The media is reporting a “record number of foreclosures” and hyping an impending crisis, but does it really exist?

The truth is a majority of homeowners who are in any state of the foreclosure process are not foreclosed on thus inflating the statistics and fueling the media frenzy. Here are some additional facts:

Less than 40% of homes that enters the foreclosure process result in the bank seizing the property.Almost 95% of all mortgages in the United States are current (according to the Mortgage Bankers Association in December 2007)Sub-prime loans only account for around 4.9% of all mortgage loans. Of those only 14.8% are in any phase of the foreclosure process.

Continue reading Sorting Through the Facts About Current Foreclosure Figures

Real estate investing is a long term play, and a few days ago I introduced five ideas that I feel are key to being successful as a buy-and-hold landlord.  I’ve already discussed the first two - here, as promised, are the final three…

Principle 3: Take care of your tenants

Nothing beats an investment that pays you every month – that’s why a prudently leveraged real estate portfolio beats the pants off the stock market in long term returns. But that rental property will only generate revenue if there is someone living in it. Vacancies are one of the greatest threats to achieving the financial performance that you expect out of your property, so once you’ve found the right tenant you’ll want them to stick around.

Continue reading Real Estate Investing for the Long Haul :: Part II

Regardless of who you support in this election - Senator Clinton, Senator McCain or Senator Obama - this is a speech that you should watch in its entirety.  I have never before heard a politician speak this directly, or with such subtlety and complexity, about this important issue facing our nation. 

The problem with the speech is that it will be blasted into a dozen Fox-news sized ten second snippets, and a truly honest discourse on race in America is not a topic that can be reduced into sound-bites. 

If you’re a supporter of Senator Obama’s then listen critically.  If you’re not then listen with an open mind.  Either way - listen. 

Continue reading Race in America

I’ve written that I’m not a big fan of the legislation currently making its way through congress that would require lenders to cut homeowners a break as they look into the chasm of foreclosure. While I’m not against the idea of giving consumers a helping hand – particularly when doing so shores up the economy – I am against the idea of trying to characterize such moves as free, tax-neutral bailouts funded which the banks will fund. These costs are always passed on to the consumer.

Continue reading Lenders in the crosshairs

Successful real estate investing is a long term game. Following the right strategy with discipline and perseverance will allow smart investors to weather the market’s cycles and build equity. Time and leverage are your friends.

But don’t underestimate the importance of the time part of the equation. In the past I’ve compared the performance of the real estate market with the stock market. For the disciplined investor, real estate performs favorably to the stock market over any reasonable period of time, but you’ll need a few years for the strategy to be effective. If you’re only going to stay in the game a year or two you might as well buy a mutual fund and call it a day. But investors with perseverance will see their wealth grow much faster by pursuing a prudent real estate strategy than they will betting on the stock market.  So to take advantage of time you’ll need a little endurance. Sticking with your real estate investing plan is a lot easier if you’re prudent about your decisions and keep your eye on some fundamental points.

Continue reading Real Estate Investing for the Long Haul

Real Estate Investment Clubs (REI Clubs) have long been touted as an excellent means of learning about real estate investing, finding deals and networking with other investors. It is important for beginning investors to find clubs in their area that are reputable and have a dedicated group of members and hold regular meetings and networking opportunities.

Trustworthy clubs will let you attend your first one or two meetings for free. Here are some more tips to finding a great REI club to help you start your real estate investment business:

Beware of the Sell-fest - there are a few bad Continue reading Profiting from Real Estate Investment Clubs