As a teenager in the 1960′s it seemed the world was tryin’ to make too many sea change pivots at once. We don’t seem to really become consciously aware of the world outside our neighborhood, school, and specific ‘kid’ stuff ’til we’re in jr. high school. Heck, now it’s not even called that — it’s middle school. That decade has since been referred to as ‘The 60′s revolution”. The kids born a mere 3-8 years before me decided long held values, principles, conventions, and almost everything else was outdated.

Many have learned the hard way that OldSchool got its name the hard way — by producing solid results every time it’s tried.

Don’t get me wrong about this. Long ago I made a promise to myself. I’d adjust to new technology, new and better ways to do things, and change in general. I did so as a result of watching the consequences dealt to those who didn’t. Adjusting to change is one of the most difficult challenges in life. The trick though, is to develop the ability to wisely discern what change is real, truly beneficial, and has ‘legs’ — and what is change merely for the sake of change.

An example of inexperienced, misguided leadership making long lasting, principle-defying decisions for an entire industry, is real estate brokerage. That’s not a topic for this site, but it illustrates the difference between real change and change pretending to defy gravity. The last 40+ years the industry has been almost exclusively run by the ‘agent-centric’ business model. Translation: The tail wags the dog. The last decade or so, real estate ‘teams’ have almost universally opted for the OldSchool ‘broker-centric’ business model. Teams have been producing profits embarrassingly higher and more consistently than even their broker employers. It’s an irony I’ve quietly appreciated for awhile, possessing OldSchool DNA and all.

Sports is the best, most visible illustration of Old vs New ‘School’.

In team sports, it’s axiomatic that a team with a buncha me me me players, who couldn’t spell ‘team’ if you spotted them the t-e-a, will almost always lose to a slightly less talented, but unselfish buncha team oriented players. It’s been recently proven again with just one NBA team. The Knicks have two bona fide superstars. Yet after the first 22 games of this season they’d won just 7. Then, as if the OldSchool gods were bored and in need of some comic relief, those two superstars were simultaneously removed from the team due to injury and a death in the family. Enter a kid who couldn’t be more of an OldSchool throwback — Jeremy Lin. The next 8 games had them losing just once. Those from the ‘watch me’ group went nuts. He’s only winning cuz they’re playin’ bad teams. One of their stars returned, not the prolific scorer, mind you, just in time to face NBA’s defending champs. “You’ll see now, many said. Reality is about to rain down on Jeremy Lin and the Knicks.

Jeremy Lin and the Knicks ‘schooled’ the champion Mavericks. Not only that, but the Mavs gave Lin the best compliment they could, by assigning last year’s MVP — a 6’11″ stud of a superstar in every way — to guard ‘little’ 6’3″ Lin. Lin calmly sank a 3-pointer over the lunging giant. Are the Knicks as talented as the Mavs? No objective fan would say so out loud. But a better TEAM beat ‘em.

Change, adhering to proven principles is almost always very beneficial.

An excellent example is the airplane industry. Passenger planes powered by gas engines turning props, lost out to jet engines with no props. They both obeyed the laws of gravity, thrust, and lift, the laws governing flight. The change from prop driven to jets was the natural progression. We all adjusted fairly easily to the change.

The same can be said of the sea change in cars. When fuel injection replaced carburetors, no principle of internal combustion was violated. It was literally better in virtually every possible way. It’s probably safe to say their isn’t a mass produced car in the world sportin’ a carburetor.

OldSchool — change — and real estate investing.

I’ve seen the many changes in real estate investing since I first understood the concept back in the day. The principles still hold true. Principles tend to do that — much to the chagrin of those who choose to ignore them. Like gravity, what I’ve always called the physics of real estate investing work every time they’re tried — and, sadly at times, every time they’re tested or ignored.

Defy the law of location quality long enough and you’ll pay the price, one way or the other. Those who cavalierly ‘break’ this law without penalty, are so many times the ones who pay the most when it finally comes home to roost.

Ignore the law of leverage — that is the real law of leverage, not the size of a down payment — and your investment capital will pay the price. It’ll happen in much the same manner as water turns into steam and disappears when it reaches the boiling point.

Decide to appropriate cash flow years, sometimes decades before its time, and you’ve ignored the basic principle of what cash flow is. It’s nothing if not a simple yield on a given amount of capital. The larger the pile of capital, the bigger the yield in terms of dollars. The ‘percentage’ is more or less the same for small or large capital amounts. Why on earth would people purposefully employ a strategy guaranteed to prevent a large cash flow exactly when they wanted it most? The principle there is ‘capital growth before cash flow’. 

There are many more principles/laws of real estate investment. The key is to understand when innovation is actually a beneficial leap forward, a real improvement. The ability to correctly discern the difference between positive change, and change that purports to successfully defy gravity, is more than just crucial. For most it’s the difference between discussing which cruise to take, and gettin’ up in the morning to go to work when you’re 71 years old. Or 80.

The speakers scheduled for the BiggerPockets Summit

The speakers Josh Dorkin has signed up for BP’s first ever Summit, are pretty much OldSchoolers. The common denominator found in today’s methods and back in the day’s methods, is the strict adherence to sound principles. There will not be anyone there expounding on theory. Nobody’s there to sell their books or tapes or seminars.

What you’ll get from these speakers is nothin’ but what works. They won’t be tellin’ you how to get rich by July 4th. They won’t be legitimizing silly strategies concocted to excite and amaze, based upon Barnum ‘n Bailey’s infamous axiom. Instead, you’ll hear explanations of timeless principles. About laws that ruthlessly govern the results dictated by whether or not we respect, and yes, obey these principles and laws.

OldSchool Definition: Where folks go to learn how to produce predictably positive results in a given discipline.

Josh calls it The BiggerPockets Summit.

Hope to see ya there. I’ll be the BawldGuy.

Related posts:

1. Makin’ the Case For OldSchool
2. Makin’ Grandma’s Bread – Yeast – And RESULTS
3. Do-It-Yourselfers Are Excellent At Reproducing Similar Results of Mediocre Pros
4. Going OldSchool – Gettin’ Rich Slowly Probably Won’t Crush Your Spirit
5. Retirement Income – Great Results? Compared To What?

Article Author: Jeff Brown

Jeff has written 113 articles for us.
Visit Jeff’s Website: http://www.bawldguy.com

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Licensed since 1969, broker/owner since 1977. Extensively trained and experienced in tax deferred exchanges, and long term retirement planning.

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I am a big believer of using forms in my real estate business. I have found time and time again when I am talking with a seller and I “wing it” instead of using my Property Information Form, I invariably forget to ask something important.  There is some piece of information I need that I don’t get in that initial phone call. Sure, you can always call them back, but I really hate to do that. You just look unorganized.

Forms insure that you get the same information each time, and that you get all of the important information you need. Not only are forms a time saver, they can also save you money. A good example is when you inspect a property you plan to make an offer on.  If you are not using a form when you do your inspection, you are almost certainly costing yourself money. 

What forms do I use routinely in my business?

I have a number of forms that I use in my business, but here are the 3 top forms I use on the buying side of my real estate business.

Property Information Form

[ Property Information Form linked ] This is the form I use when I talk with a seller.  Right at the top of the form, I have the date and the referral source. Since I do a lot of direct mail to absentee owners and probates, I have a place to circle what type of lead it is (PR for probate or OT for out of town/absentee owner) if indeed the lead was from direct mail. I also have a place to list the state they are calling from. I put this on the form after waking up folks several times that were in different time zones. There is also a place for “other” referral source. You always need to know where the lead came from.

The second section is for the contact information. I have the name of the caller on the form, and the name of the actual owner on there also. These are not necessarily the same especially if you are working with probates.

In other sections I have the property information including the age of the systems and what repairs and updates are needed.  There is a place for the existing mortgage information as well. There are several questions on the form that will help me find out their reasons for selling and what their motivations are.

In the last section, I have a place to calculate my offer using the ARV (after repaired value), the percentage I will use, repairs needed and a place for “Me”. I will put the amount I want to make on this line.  After putting everything down, I will know what my MAO or my maximum allowable offer will be. There is also a spot to make notes about this property.

That’s pretty much it. It’s not a fancy form, but it is one that works great for me.

Property Inspection Form

[ Property Inspection Form linked ] I always use a property inspection form when I first look at a property.  Knowing the extent of the repairs and updates needed, is the only way you can make a good offer on the property.  It is so easy to walk by the panel box only to find out later it has to be updated.  If you have to install new windows in a property, you need to know exactly how many there are to know what the cost will be. This was something that I personally used to forget all the time; to count the windows. Now that I have it on my form, I always know how much to allot for windows. You need a form with the major items and systems in the home listed.

What you don’t need on this form are all of the little things like receptacles, door knobs etc. I put a “fudge fund” into my numbers for these sorts of things. It will typically be a percentage of the renovation costs, and the percentage will differ depending on the degree of renovation needed.

Simple Purchase and Sale Contract

[ Simple Purchase and Sale Contract linked ] My closing attorney is also a real estate investor, and he is very active in our REIA group.  He provided our group with a simple Sales and Purchase Contract that most of us use on all of our transactions.  I make subtle changes depending on whether I am the buyer or the seller, but it is the form I have used for years. For instance if I am the buyer, I might add some type of contingency such as for a crawl space inspection. If I suspect there could be damage that I can’t see this could be very costly and I will want to have it checked out. This won’t necessarily keep me from buying the house, but it would certainly affect the amount I offer.

If you would like a copy of the forms I use you can get them here or in the BiggerPockets Real Estate FilePlace.

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3. Real Estate Forms & Contracts
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5. How to Run Your Real Estate Investing Business on Your Own Terms

Article Author: Sharon Vornholt

Sharon has written 25 articles for us.
Visit Sharon’s Website: http://LouisvilleGalsRealEstateBlog.com

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Sharon has been investing in real estate since 1998. She owned and operated a successful home inspection company for 17 years. In January of 2008 she took the leap of closing her business to become a full time real estate investor.

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One of the greatest joys for me is to watch others succeed as real estate investors.  I am always amazed how some investors jump in and can create profits from almost any deal, while others seem to struggle with each step they take. 

Over the course of my investing career I have tried hard to identify those characteristics which I believe exemplify successful real estate investors… before they even get started.  And, while this have been no easy task, I thought I would share some of the most common characteristics of successful real estate investors that I have discovered. 

1.  They are not victims.  Every successful investor I have ever known does not allow themselves to be a victim to their circumstances.  They accept responsibility for where they are in their life, their decisions and the results they are creating.

2.  They come from professional backgrounds.  Those individuals who have been in the professional business world have an easier time succeeding in real estate.  I believe this is true because many business professionals have learned to work in teams, have been required to be self-starters, are used to performance based compensation, and for more then a few, they have learned how to manage things.  All of these skills translate directly to building a real estate investing business.  Does this mean everyone in this group succeeds?  No!

3.  They are extremely motivated.  I have found that those investors who have not had the benefit of working in a professional environment, know if they stay where they are, the prosperity they are seeking will not be forthcoming.  In fact, they most likely will be stuck in a dead end job with no way out — and what a tremendous motivator for these individuals that is . . .

4.  They are not afraid of hard work.  Successful investors are motivated by more then just money.  This is an extension of number 3 above… yet I believe this is the number one issue which separates the men from the boys.  These successful investors know the money will come, and it has the potential to come in big chunks, often with little effort, especially when compared to the number of hours required to generate that “big chunk” in the working world.  But, to get that money moving towards them, they have to work at it.  They need to fix problems.  In essence, they must execute item number 1.

5.  They are constantly learning.  The most successful investors get rid of their egos and allow themselves to be taught.  Like a sponge on a mission, those who are willing to learn as much as they can, seek out the advice of experts and then actually take the advice and use it, are hands down the ones that succeed almost with ease, and are fun to coach.

Now for a real life example…

I get a lot of new investors approach me after they have spent thousands of dollars on other mentoring and guru programs.  I am always leery of these investors because I am concerned that they have been taught things that just don’t work, and that they can’t be untrained.

In October of last year I was approached by a new investor who fit everyone of the charateristics mentioned.  During my discussions with her, I could tell that this investor was one focused and motivated person.  Her level of clarity and enthusiasm could not be missed, and everything about her background shouted success!

As I watched her in action I was impressed how she was willing to take those actions others are not willing to take.  Actions like developing her farm area, or getting out of her car — yes actually getting out of her car to walk the neighborhood and get a feel for why this would make a great place to get started. Then she started mining the MLS for properties in that area — of course she found several and made offers.  This lady is all action; just point her in the right direction, let her know what to do, and then stand back.

Within four weeks of getting started she had offers in.  Within 6 weeks she had her first offer accepted.  Within the first 3 months she had the property purchased and on the market. Finally, within the next 2 months she had the deal sold, made a great pofit and was moving on to her next deal. 

Why was she able to spring into action so quickly?  Simple… she displayed those 5 characteristics above and was not afraid to take action!

What does this mean to each of you reading this post?

Here is the take away…

Ask yourself: How do I measure up to the characteristics above?  Do I display the characteristics of a successful investor?  If not, what changes do I need to make to achieve my success?

Image: Kevin Teague

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Article Author: Peter Giardini

Peter has written 82 articles for us.
Visit Peter’s Website: http://www.theclubmastermind.com

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Peter is an active and successful real estate investor in the Baltimore Maryland region for the past 8 years and is one of the founders of The Club Mastermind a real estate investing coaching program focused on local coaches helping investors to perfect their game.

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