Cash is King

If you missed Monday’s email I am going to be going over 4 things you need to be doing now to be ready for the opportunities that will be created because of Coronavirus. I want to be clear I wish this wasn’t happening, but while this is very personal to a lot of people (including me and the employees in my company) this is another recession. Which many of us have been through before. There have been 4 global recessions since World War II and we will all get through this together. While it will create opportunity for some, it also has the potential to be devastating for others. I am just trying to help you prepare financially for this and to look at the past to prepare for the future.

Cash is king moving forward. Let me repeat cash is going to be king in the next 12 months. Here is why. Banks want to lend, it is in their nature. The problem is if people are out of work or just starting a new job, or are behind on bills the bank cannot lend to them. (Currently, if I am going by generally reported unemployment will be around 30% of people as of now) They can only lend to those who have a steady job, and have been paying their bills. This makes the demand on houses go down. Sure, people will still want houses, but they won’t be able to get a loan to get houses or may not have a downpayment. So when the demand goes down, so does the price of real estate. 

Supply will also go up as demand goes down. People paying on a mortgage will either default or decide to sell to move into an apartment. Either way people may be selling their homes and moving to rentals. Just like in 2008. Supply going up and demand going down. More sellers and less qualified buyers.

This is where your CASH comes in. That downpayment will make the bank feel reassured you can take on a loan. You could even be an all CASH buyer if you have something to refinance. You won’t have to even try to attempt to get a loan from a bank for a new property.

There are many ways to get cash. Refinancing, small business loans, etc. 

Getting Cash ready is the first thing you should be doing…there will be massive opportunities for those with cash. So should you go get cash right now? Hold on….let’s discuss that tomorrow.

Talk to you tomorrow,
Ken

Affordable Housing and Mobile Home Parks

The biggest issue we face today in real estate is affordable housing. With rents rising faster than income, cities are looking for a way to help people afford to live in their communities. Where in steps mobile home parks. These parks have always been frowned on by the cities because of the stigma they carry, but governments are starting to open their mind to these parks as affordability becomes more and more of an issue. 

In this YouTube video,. I talk to Mike Ayala of Park Place Communities. Him and his partners are creating an investment out of these mobile home parks and doing quite well at it! In this episode, Mike discusses what he looks for in a park, red flags he sees, and the good he is doing for the community. 

I will tell you that affordable housing will become more and more of a need in the United States over time and this is definitely something you should understand and look into. That is potential here from owning a park to possibly even converting a mobile home into a rental. Click here to watch!

Until Next Time,

Ken

Why now is the time to read the ABC’s of Buying Rental Property

Don’t skate to where to puck is,
skate to wear the puck is going.
-Wayne Gretzsky

This is a great quote and something that really resonates with me at this time. You have to move toward where you want to be, not where you currently are. So many people want to learn to buy their first rental when the market is great and they are looking to buy. The truth is, you should learn how to buy your first rental before you are ready to buy it. You should then retain the knowledge you obtain in this book to educate yourself on when is the right time to buy the rental and what rental is the right one to purchase.

If this Pandemic has taught you anything, it should be you need a side hustle. You cannot let yourself to be dependent on one income, no matter how reliable you think that income is. Rental Properties are a great side hustle. If you buy the right rental property, at the right price, it can give you a consistent monthly income to supplement the income you have already established.

So why don’t more people use real estate as a side hustle? It is because they don’t understand it. The truth is owning a rental property can be a great experience or an awful experience. The determining factor is if you are educated on buying and managing a rental property or if you are learning as you go. I love learning as you go in a lot of things, but rental property isn’t one of them.

If you are interested in obtaining a rental, then take the time to read my book “The ABC’s of buying Rental Property.”  The next couple of years you may have the biggest buying opportunity you will see in your lifetime, so you need to be prepared. I wrote this book to prepare you with all of the information you need to know when purchasing your first rental. I am going to help to prevent you from making the same mistakes new investors make and to maximize your investment.

Click here to purchase my book on the ABC’s of Buying Rental Property!

Being a Landlord 101

Being a landlord can be very rewarding, but in order to have a good experience you have to follow some basic rules to do it right and trust me you want to do it right.

  1. Remember it is a business.

    Your tenants are your clients, so while you always want to be friendly and professional you do not want to be their friend. You may have some difficult conversations coming up and a friendship will make them too comfortable and you uncomfortable having those discussions.
  1. Be Clear on Your Policies and Procedures

Who takes care of the landscape? Can they have pets? Do you care if they smoke in the unit? How many cars can they have? Can they park a work van on property? Who handles water, sewer, and trash? These are all policies and procedures that need to be addressed within the lease. Sometimes new landlords forget this and when it comes up later you can’t enforce what isn’t in the lease.

  1. If you put it in your lease agreement be ready to enforce it.

The lease agreement is a contract you both are bound to. You have to perform and enforce the contract. If you do not enforce it it could bite you later in front of a judge.

For example: Even though you were trying to be nice by not charging the late fee, the tenant can then argue they didn’t think they ever would be charged because you waived it the one time. Even though you were being nice, you broke the contract. Even if in their favor the contract was still broken.

So bottom line if you put it in the lease you have to enforce it.

  1. The security deposit.

The number one reason for lawsuits is security deposit issues. Make sure a tenant fills out a move in form with any damages that are there and you take pictures. Then when they move out walk with them and take pictures of any damage. You must have photos of the damage and a bill for the repair. This is what you will need if your tenant does take you to court. You have to get a tenants security deposit back within 30 days, so you have to move fast and have a handyman ready.

Also, make sure part of the deposit is non refundable to cover things like cleaning and if you have carpet then carpet cleaning.

You will want to bring in professional companies to clean at move out.

  1. Run a proper credit and background check

A lot of time new landlords just want to get someone moved in. They seem nice and honest, so you give them the benefit of the doubt. Never do this. You ALWAYS want to run a credit and background check. There are rental screening websites that do this for you. You then charge the potential tenant for the application fee. Never assume or give people the benefit of the doubt. I always say trust, but verify.

  1. Fix what is broken

If you want quality tenants you have to be a quality landlord. If something is broken then fix it quickly. By law, you have 10 days for major repairs. Have a handyman on call who can fix the problems as needed. Also do not let the tenant fix things on their own.

If you follow these simple tips you will be well on your way to being a successful landlord.

6 Skills you have to master in order to be wealthy

There are six skills that every future millionaire must master. These six skills will put you in the millionaire mindset and prepare you to stay in that mindset throughout your life. When you build on the six skills; persuasion, reading people. Sharing the wealth, leverage, problem-solving and saying no, you set a foundation for the life that you want to have. They are skills that you have to hone and work on every day of your life and when you make them a priority, you will begin to master them.

Persuasion

Persuasion is the ability to convince someone to see things in the way that you want them to. You have to be able to persuade your family to support you when you start a business. You have to have the ability to persuade investors to invest in you and employees to work for you. You also have to be able to persuade yourself, that you can accomplish what you set out to do. You have to be able to persuade yourself to keep moving forward. Persuading is not a perversion of the truth, it is a form of selling. Therefore, if you are a good salesperson, you will be good at maintaining the skill of persuasion.

Reading People

Reading people is a very important skill. You need to be able to have good instincts about people and knowing who you can trust. You have to be able to know how to read your investors, your customers, and even your family. You need to be able to read the signals to know what your investors need to feel assured in their investment. You need to be preemptive about understanding your customer’s needs and being able to read your customers is a good way to give them what they want before they even have to ask for it. Behind ahead of the game is a great way to make sure that you never fall behind.

Share the Wealth

You cannot be greedy when it comes to building your wealth. Sharing your wealth is a very important skill to maintain throughout your life. Ways that you can use this skill include; hosting charity events, gift cards, letting people test your product for free. You have to be willing to put some of the work in for free. You need to be willing to give things away in your business in order to help you build a reputation and referral source from clients.

Leverage

Leverage is an important skill to hone. You have to be able to leverage people to see how they can benefit you in the most productive way. You have to be willing to leverage your contacts, your friends and even your family. Leverage is more than just about how they can help you, but also how you can help them. You cannot leverage on only one side of the playing field. You have to be willing to give as much as you get.

Problem Solving

You have to be able to solve problems rationally. You cannot let problems distract you from your end goal. You have to learn to calmly handle these problems as they come up. If you cannot learn to handle problems quietly and calmly, then over time they will start to have an effect on your business. This is why you have to be consistent with how you solve the problems and when possible, keep them at an arm’s length.

Saying No

You have to be willing to say “no” more than you say “yes.” There is a guilt that can sometimes come up when we say no to things. You have to remember that your time is valuable and you need to give your time to the things that are consistently making you money. This is why it is an important skill to know when to say no and stick to that as your answer.

Conclusion

These are six skills that all millionaires maintain. These skills are important to work on and hone over the years because they will make you more successful and better respected in your life. They work hand in hand to help you build your life without anything getting in your way. This is how you begin to set a foundation for the life that you want to have.

For more articles like this click here to access my weekly blogs.

Until Next Time,

Ken

Reasons A Student Fails in Business and C Students have a Better Chance

Most people are prone to commonly believe that students who do well in school,
as in they get the highest grades will be more apt to work harder but this is not usually
the case for many reasons. Surprisingly, students who have more of an average grade
history are projected to do better in the business world. There are many different
considerations that most people do not realize when it comes to seeing the differences
between these two groups of individuals. These differences include things such as work
ethic and their basic attitude structure.

The talk verses the walk

This is a huge difference that you can vividly see between these two groups of
individuals. Most students that are the top of their class are big when it comes to talking
about all of the things that they are able to do. They always believe that they are the
smartest person in the room and often because of this mentality when it comes to
business, they often fall into the habit of promising things they are not able to fully
deliver on. Students on the other end of the equation, who may have done averagely in
school understand the benefits long term of under promising and over delivering. They
know that if you are stuck in the mindset that you are the smartest person in the room
that you will put yourself in a position where you have no one to learn from and nothing
to gain.

Me Mentality

Students that got the highest grades in school were the best of the best and
rarely team players. They fought hard to individually be the best at everything that they
set their mind too including grades and sports as well. They rarely have to work with
others to figure out how to solve problems because they feel the need to rush ahead
themselves and solve it in order to acquire the praise from their parents and teachers.
Students who received average grades in their formative years knew exactly how to
work with others to even out the workload as much as they possibly could. They had a
game plan to work smarter and not harder. They did homework together, studied
together and worked in packs to get everything passed in their classes. This set of
students obviously translated better into teams when they went into the business world
than those that only worked by themselves.

Credit Vs Blame

The individuals who are still riding the high of a 4.0 GPA and the praise from
high school and even college are seldom the first ones, if ever at all, to take the blame.
They have less experience in having to answer for doing something that did not meet
the highest of standards. They are the first ones to take credit when something goes
right but the last one to stand up and take responsibility when something tends to go
wrong. Average students are more prone to know how to properly take responsibility
when something was not done correctly. They take the blame when it is warranted.

Taking the High Road

It is a key quality for a business owner or anyone working in business for that
matter to be able to take the high road. You can see a clear difference between those
who know how to do this and those that do not. One of the places that this is clearly
seen is how they respond to negative reviews. Taking the high road is knowing how to
stay in your lane and focus on your growth while ignoring any negative commentary in
the other lane.

Conclusion

It may seem easy to believe that by praising the students who do well in school
that we are doing them a favor when in reality, it is not preparing them for the real world.
You can not take a prideful path when it comes to being in the business world. You
need to know how to work as a team, take the blame when necessary and work for the
better of the entire group rather than just themselves. You can not expect to simply be
an alpha and be diligent enough to get everything done on your own. In the end, a pack
mentality will be much more of a benefit in the long run.

The 3 Things you can teach your kids about Money

Difference Between an Asset and a Liability

Assets put money in your pocket. Think of a rental property, a business, a skill. A Liability is something that takes money out of your pocket (that is why your primary house is a liability) Credit Cards, your home, your car are all liabilities. Explain this in children’s terms using their allowance. Most kids will just buy liabilities. Candy, games, etc. But open their minds a bit. Have them save to buy a rake and then use that rake to rake yards in the neighborhood for a profit. Or buy business cards to pass out where they can pet sit. The rake and the business cards are assets for children because they are vehicles for them to make more money.

With my kids when they were little we would go pick up golf balls from the course and sell it the next day to the golfers for $1 a ball and $5 for the nice golf balls. My kids were easily making $100 a day. Those golf balls were producing a profit for them far greater than their allowance for picking up their room.

Explain why it is so important to have so many assets under your ownership

When they start seeing profitability from one of their assets explain to them they can have another one. Show them the more assets they have the more opportunity they have to make money. This is diversifying your assets. For example, if they buy a rake to rake leaves their profits will be highest in the fall and non-existent in the winter, so they need multiple assets, so they can withstand the highs and lows.

Cash Flow vs Capital Gains

This is a tough one to teach kids, for adults we understand this. We know if you try and flip a house or sell an asset that is it very risky. For one, you have to try and time the market perfectly and second you pay the highest tax rate even if you do so successfully. I believe it is like gambling, you may win one hand, but will eventually lose it all on red. This is a bit over a child’s head. Capital gains, tax, etc. What I don’t think is over their head is cash flow. So for this lesson, have them take their business and create a recurring revenue around it. For example, if they pet-sit for $15 an hour, tell their clients there is a $10 monthly fee to be able to book services at that price. If not, it is $25 an hour. Explain to their customers what you are trying to teach them. If you can show your kids a monthly cash flow that comes in without them having to go and find more business I think that is a great groundwork for the cashflow vs capital gains conversation later on when they are older.

Rich Vs Poor Mindset

The variables that come to the table between those sitting down on the wealthy side and those sitting down on the opposite side have less to do with opportunity and more to do with their mindset. This is an important thing to acknowledge. Our background, our educational status and so many other variables are less impactful than the mindset that we have during our day to day lives. The mindset we choose to have will change absolutely everything. The mindset of the poor is commonly directed towards what they cannot afford and the mindset of the wealthy is more directed to how they can work to afford the things that they want. 

Spending Habits

There are many differences between the spending habits of the wealthy and the spending habits of the poor. Those who are poor spend the money they make and then choose whether or not to invest what is left. Those who are on the wealthy side of the spectrum invest first and then spend when needed. The wealthy know that investing their money will result in long term cash flow while those on the poor end of the spectrum only care what the money they have can do for them in the here and now. 

LLC Benefits

The wealthy know that having an LLC will protect their assets. If they are in a position where they are being sued, the person is actually suing a corporation or a company. There are layers that they will have to pierce to actually sue them directly and this is a very difficult task. The LLC also gives them the ability to write off more taxes from their business investments as well. People on the other end of the wealth spectrum are more often than not working a w-2 job and not able to get any tax breaks. Moreover, this thought process usually does not occur to them at all. 

Investing

The wealthy and the poor handle their investments very differently. The wealthy are very active in their investments. They are aware of what is happening to their money on a regular basis. They find them personally, do extensive research, and understand the numbers and the fees involved in the investment. On the other hand, those on who are considered, “poor,” usually hand off their money to someone without any research involved. They hope for the best but are not truly aware of what is happening with their money at all. They do not fully take the time to understand the investment that they are making or have the knowledge to make the financial decision to invest at all. 

Conclusion

Mindset is an invaluable asset when it comes to wealth. Those who are wealthy have an abundant mindset. They are purposeful about their spending habits and knowledgeable about where their money is going. They are direct about their objectives and they are fruitful in their investments. Those who are poor do not keep track of where their money is coming from or where it is going to. They may invest on a whim and hope for the best but they do not plan and follow their investments through to the end. This all comes down to the mindset that someone has. There is a clear line that draws the differences between the mindset of the wealthy and the mindset of the poor. If you can take the time to change your mindset, you can change your life. 

6 Skills that Millionaires Master

There are six skills that every future millionaire must master. These six skills will put you in the millionaire mindset and prepare you to stay in that mindset throughout your life. When you build on the six skills; persuasion, reading people. Sharing the wealth, leverage, problem-solving and saying no, you set a foundation for the life that you want to have. They are skills that you have to hone and work on every day of your life and when you make them a priority, you will begin to master them.

Persuasion

Persuasion is the ability to convince someone to see things in the way that you want them to. You have to be able to persuade your family to support you when you start a business. You have to have the ability to persuade investors to invest in you and employees to work for you. You also have to be able to persuade yourself, that you can accomplish what you set out to do. You have to be able to persuade yourself to keep moving forward. Persuading is not a perversion of the truth, it is a form of selling. Therefore, if you are a good salesperson, you will be good at maintaining the skill of persuasion.

Reading People

Reading people is a very important skill. You need to be able to have good instincts about people and knowing who you can trust. You have to be able to know how to read your investors, your customers, and even your family. You need to be able to read the signals to know what your investors need to feel assured in their investment. You need to be preemptive about understanding your customer’s needs and being able to read your customers is a good way to give them what they want before they even have to ask for it. Behind ahead of the game is a great way to make sure that you never fall behind. 

Share the Wealth

You cannot be greedy when it comes to building your wealth. Sharing your wealth is a very important skill to maintain throughout your life. Ways that you can use this skill include; hosting charity events, gift cards, letting people test your product for free. You have to be willing to put some of the work in for free. You need to be willing to give things away in your business in order to help you build a reputation and referral source from clients. 

Leverage

Leverage is an important skill to hone. You have to be able to leverage people to see how they can benefit you in the most productive way. You have to be willing to leverage your contacts, your friends and even your family. Leverage is more than just about how they can help you, but also how you can help them. You cannot leverage on only one side of the playing field. You have to be willing to give as much as you get.

Problem Solving

You have to be able to solve problems rationally. You cannot let problems distract you from your end goal. You have to learn to calmly handle these problems as they come up. If you cannot learn to handle problems quietly and calmly, then over time they will start to have an effect on your business. This is why you have to be consistent with how you solve the problems and when possible, keep them at an arm’s length. 

Saying No

You have to be willing to say “no” more than you say “yes.” There is a guilt that can sometimes come up when we say no to things. You have to remember that your time is valuable and you need to give your time to the things that are consistently making you money. This is why it is an important skill to know when to say no and stick to that as your answer. 

Conclusion

These are six skills that all millionaires maintain. These skills are important to work on and hone over the years because they will make you more successful and better respected in your life. They work hand in hand to help you build your life without anything getting in your way. This is how you begin to set a foundation for the life that you want to have.