Announcement 1: The Secret Life Of Michael Ross

Hi Michael,

Thanks again. Your help is greatly appreciated.

I can see the benefit to the seller.
I can see the benefit to the potential buyer.

2 Questions:

#1 I may have missed something, but where does Manny make his money? ( a fee for negotiating the contract perhaps?)

#2 I'm curious if you have any specific criteria or benchmarks you look for in regard to your rule #1 i.e "Buy in a Future Growth Area (rents will be higher compared to prices)"

Seems to be the most Important key element in your system.

I will obviously have to do my own due diligence with the Real Estate Investing bus.
But other than the obvious things like a new development, or new shopping malls contructions etc. etc.

How else can you determine Future Growth Areas? or

Future Growth Areas in Older neighbourhoods?

Quick Brainstorm of ways to determine Future Growth Areas:

- You could go to the government to see their planning zones for future construction

- Drive around town and notice New construction/development sites

- A real Estate Agent "says" that it is booming

- Look in real estate magazines specifically for Phase One time products

- Follow the government money for urban renewal ie. Trump is building a hotel in downtown Toronto here. The city has been tearing up and revamping the downtown core.

Anybody else have any ideas as to where one could look or how to determine the Future Growth Potential of an area?

Thanks Again

Duane Adolph

Originally Posted by MichaelRoss

Duane,

Thanks for asking about Manny.

Basically what Manny offers in his Program is a Contract For Deed (CFD). Manny can help with Negotiations (A big plus as far as I see it) and Drawing Up the Contract.

The idea he proposes is this...

Get the house on a CFD, with an agreed upon sales price Above the current asking price. Don't be concerned about this as the payments you make come off of this price and Add to the price at the same time. (It's all done with Math and Interest rate. I'll show you this further down the page.)

After a couple or five years - whatever the deal was for - you Then approach a bank to Refinance and Cash Out the seller. The bank is less likely to make you jump through hoops because...

1. You have proven your ability to afford the property thanks to your payments.

2. The amount you paid over the course of the contract is deemed as Deposit already paid.

3. The amount being financed is Less than the property is now worth.

Now. Before you say "No one will go for this" you need to now some more...

The properties being targeted for acquisition are Vacant. They are NOT the Primary Residence (PR) of the owner. And this is important because...

If the property is the PR the owner wants to be Cashed Out so they can either downsize and have cash left, or upgrade and so they need the cash.

A dwelling that is Not a PR is not needed to be cashed out right away. The owner had Probably been renting it or something. So they are More Likely to go for it.

Manny gives you some ads to use to have people with vacant homes Call You. And those ads do work!

I ran a few ads and had maybe a dozen callers offering me their place. And even though the ad specifically said Vacant I had people call who said they could Move Out to elsewhere.

My problem was... the people who called all wanted ridiculous amounts for their places. Like one guy who had a duplex pair and wanted over $400k Each! I could buy an entire home elsewhere for less than that.

And I was faced with this because the city I was living in at the time was going nuts. A real estate client I had at the time remarked to me that in all the years they had been selling real estate in the city (over 25) Nothing was like this. Homes would sell within days, literally. Another real estate client said about townhouses, a year or so ago we couldn't give them away at $145k, now we can't hold any at $285k.

In other words, no-one was hurting to sell. Any listing was virtually guaranteed a sale within 30 days. Longer than that and the ASKing price was total fantasy land. And that's who was calling me. I was advertising at the height of a boom so my timing was off - though I was still getting calls. I was getting calls from people who had a vacant home and who were willing to sell it to me on Terms. (Remember the three rules - buy at future growth area, borrow less than you can afford, keep money in reserve. Buying these places would have broken those rules.)

One thing to be aware of with a CFD... some jurisdictions consider them a Sale at the time the Contract is signed. So whatever Taxes the jurisdiction associates with a Normal sale are applicable on the signing. So don't go into something like this thinking you don't need Any money - you'd be committing the Leaving Yourself Short mistake. Think of it in all ways Like Borrowing From A Bank, as far as your numbers go. This point is so important I'll repeat it...

When buying with a Contract For Deed, think of it in all ways like borrowing from a bank, as far as your numbers go.

Let me give you an example...

If a bank says... you need 10% deposit PLUS an additional $5k for closing costs, then you know, if you want to buy a $200k place you'll need $20k deposit and $5k closing for a total of $25k. You'll be borrowing $180k which, at 7% interest gives you Interest of $12,600 ($242 per week).

If all you have is $25k and the $180k is the maximum you can borrow, acquiring this place could ruin you. You have no reserve money and a slight interest rate rise does you in.

The same rules should be applied to any places you acquire via CFD. The Payments MUST be affordable and you MUST have money left over after the signing. You may or may not - depending on what you negotiate - pay a deposit. And depending on your jurisdiction you may or may not need to pay closing taxes, levies and fees.

Here's how it Could work with Manny...

ASKing $200k. You agree to pay $218,500 and it breaks down like so...

Home Price $190k
Interest at 5% is $9,500
Contract Term is 3 years (total interest is 3 x $9,500 = $28,500

Total thus is $190k + $28,500 = $218,500.

If the property increases in value at 5% per year, after 3 years is it worth $231,500k. All you are borrowing is either $190k (if you were paying interest only) or a little less (if you were paying principal too). Either way, it's worth $41,500 more than the $190k you'll be borrowing. That's almost 18% equity to be considered a deposit - just about double the deposit the bank would have required from you to buy now.

This is how you pay more for the place - the owner Gets more than they asked for, they just have to wait a while to get it all. Tricky, eh?

Anyway. Manny's Program is good for people who banks want to make jump through hoops - such as business owners and those who may not have a full 10% deposit. But just because you can acquire a place without that hoopla does not mean you should forget your numbers. They are even more important because of the tendency to forget about them.

Paper (contracts) are Powerful things. They can help you - or - can make your life a misery if you mishandle them.

Currently in Australia, interest rates are around 7%. And those who broke the three rules and bought at the top of the market with little growth potential, borrowed the maximum they could afford and used all their money to do so, are now scared the rates will jump a quarter of one percent. In other words, a rate of 7.25% will do them in.

Heck, years ago I was paying 14% for a property investment loan! - and that was the cheapest money I could find at the time!! So it boggles my mind when I hear these people biatch about 7.25%, they just don't know how good they really have it. Of course, if they'd borrowed less than they could afford, kept money in reserve and bought places with as close to 5.2% return as possible (or greater) they wouldn't have the concern they now have.

Here's how that tiny rate rise does them in...

They borrow $400k for a place - this is the average in a lot of suburbs in this city now. At 7% their interest is $28,000 ($538 per week)! They rent the place out at $300 a week (about standard for such a place). The rent gives them $15,600 a year. Leaving them with a shortfall of $12,400 ($238 per week).

An extra quarter percent rate rise means an additional $1,000 a year about $20 a week ($80+ per month). As they were borderline already an extra $80 a month sinks them. Maybe they could handle half of that but not the full lot. This then forces them to live a bit on Credit Cards and pay the interest on the card (going further in the hole). At least until rates either come down - or - the lease expires and they can raise the rent.

BUT, if they raise the rent the tenant might leave to go elsewhere and the place is vacant - something they Really cannot afford.

If they had just bought a place 10% cheaper for $360k the interest would only be $25,200 and their shortfall would only be $9,600 ($184 per week). Leaving them with room to breathe before it got up to the $238 per week they could afford. And a rate rise of one quarter of one percent would only be $75 a month, $17 a week and would just take them to $200 a week shortfall and still give them a $38 a week buffer zone. Not to mention the extra money they would have in reserve thanks to using less deposit.

Anyway. That's the gist of Manny's program and why it's still good to go with your numbers even if having him help you. Hope this helps.

Michael Ross

Originally Posted by SteveSki

On my own I would take it easy and only do one or two shoots a week and goof off at the beach the rest of the time.

And what the hell would be wrong with THAT?!?!

It sounds like "The Secret" is holding you back from doing what you really want to do.

Jim

Hi Duane,

A few thoughts for you...

Buy Affordable real estate in small towns, especially Waterfront.

There's more Available than most think even Today...

Smart Boomers... way back Knew that small town real estate and... http://www.acreages.com/

Would turn a few dollars into Millions as the Growth of populations & cities long term would have only one place to Go.... into Major expansion of Cities...

If you're looking for ideas as to where one could look or how to determine the Future Growth Potential of an area Talk to Seniors who Are/Were involved in businesses and real estate...

I get Great Free investment information from a Barber who's in his 80's who Shares his life knowledge of what he would buy Today... Doesn't need that much money anymore...

And Actually neither do most people if they would only add a little bit of Real Estate and Diversification into their Portfolios... 2, 3, 4... Properties can Do just fine...

Depressed real estate in most Locations will always Do well long term before most retire...

Here's an interesting real estate web concept...

Steve Gillman shares excellent affordable information and a Simple business web model worth Studying...

http://www.housesunderfiftythousand.com/
http://www.webhikerllc.com/

If you have a little extra money consider some BC real estate...

Mild winters, retirement heaven... Always a Great long term investment... No matter where your home base is...

Phil

And what the hell would be wrong with THAT?!?!

Nothing if that's what you want. But I want to be
the kind of beach bum that Frank Kern is.

An underachieving in dreams only!

Cheers,
Steve Shulenski
www.MaverickPhotographer.com

Duane,

Here's another one to throw into the swing of things.
http://www.sowpub.com/forum/showthread.php?t=3768

Phil

Posted by SteveSki
On my own I would take it easy and only do one or two shoots a week and goof off at the beach the rest of the time.

Posted in response by Jim
And what the hell would be wrong with THAT?!?!

Jim, if that's what you Want to do and get Satisfaction doing that, then nothing's the hell wrong with it. BUT, if doing this is Not Satisfying and you want to do something else but lack the Drive to, then there's plenty wrong with it.

An associate "made it" Online. Was able to generate all his income online, 24/7, without handling any physical product. He had achieved what most so-called Internet Marketers fantasize about. Problem was, he was Miserable.

After 6 months he decided to go back to work. And he went back to his happy self. Happy and satisfied and fulfilled working offline - as opposed to miserable and unfulfilled making money for nothing online.

If working one or two days a week and then goofing off works for you and you are happy doing that, then do it. But know that not everyone is satisfied with that and they need to be fulfilled in other ways and must do what's right for them. And if that's working a job, then so be it.

Michael Ross

Duane,

Thanks for asking.

...where does Manny make his money? ( a fee for negotiating the contract perhaps?)

Manny makes his money when you Buy In to his program - and - when you have him create a Contract for you. He can create a CFD without you Buying In, but it costs you more money that way.

Don't quote me on this, but I think his prices are something like $250 for a contract when you Buy In and $500 if you don't. Either way, still cheaper than a normal lawyers creating one for you.

I'm curious if you have any specific criteria or benchmarks you look for in regard to your rule #1 i.e "Buy in a Future Growth Area (rents will be higher compared to prices)"

I've lived in 3 different cities in two different states and the single thing that comes Before ALL Growth is...

Infrastructure!

And the thing with Infrastructure is, the full effects can take years to happen.

A new two or three lane motorway into an area can create ten to fifteen years of growth.

The city I live in now, I have identified Two areas with Good Future Growth prospects. Both are... slightly out of the city (not too far to travel to work daily) and both are benefiting from Infrastructure Improvement and Planned Infrastructure Improvement.

Without infrastructure - and I am referring to roads and rails and transport stuff - it's hard for people to move to those areas. Give them quicker transport and the place will take off.

Just today I was speaking to an old friend I haven't seen in 18 years. He was telling me all about the suburb we used to live in back then. There are two new motorways into the area and a new train line. And as a result, what was a no growing to slow growing place is now taking off. And much of the surrounding countryside is now ALL housing estates. The major shopping center has doubled in size, the town center shopping center has also expanded, as have some of the clubs. (A far cry from when I lived there and a major developer had to offload 3/4 of the development to the Govt Welfare Housing because he couldn't find anyone to buy it!)

I used to work at Australia's Wonderland - think Canada's Wonderland for a idea. The place closed in 2004 and was demolished in 2005, but there is now motorway access into that neck of the city and things have gone gangbusters. What used to take around 2 hours to travel into the city, now takes around 30 minutes.

It also helps if the population of the city is growing. For that you'll need to contact your local authorities.

And through it all, you'll need to keep your finger on the pulse of what's going on in your city. The two main areas I have identified were not viable 15 years ago. But now they are. As is a Third area that *I* avoid because everyone is talking about it - so prices are already artificially higher than they would be (still okay for most people to invest but *I* can get better bang for my buck elsewhere).

You could say, if the area was not viable 15 years ago but is now, doesn't that mean it was viable back then?

Well no, because no-one wanted to live there, the place was stagnating, prices were dead flat and places were empty for months at a time (even with dirt cheap rent and one month's free rent). No infrastructure was planned at the time.

But things change. And since then, infrastructure has occurred. Just enough to make the places viable but not enough to drive the prices through the roof, yet. But over the next five to ten years, things in those areas will be skyrocketing.

For example: Most housing in the city is $350k++. But just 30 minutes drive into those two areas and you can buy condos and townhouses for $130k to $180K and houses for $190k - $240k with rents around 5.2% or better. (You cannot find a condo or townhouse within 20 minutes of the city for under $250k, so these places are little goldmines.)

Infrastructure is moving into the areas - and there is also The Ripple Effect. Think a pebble in a pond and waves rippling out. Think of those waves as Price Rise waves. They start in close and gradually move out - along the infrastructure lines.

In this country, some smaller rural towns Seem like good places to invest. But what drives those prices is other investors and not true Living Demand. I avoid such artificial Flavor of The Month investing.

Anyway. MY experience tells me, New as well as Upgraded infrastructure points you in the direction of Future Growth. But make sure your city's population is also growing.

Michael Ross

[GordonJ]

Hi Duane,

If you want to SEE this concept, spend a few minutes and

Go to google maps. Type in Boston Heights, OH 44236

Use the HYBRID map. Find Rt 8 and Interstate 80. OK you are there.

You'll see a golf course on the corner of E. Hines Hill Rd and Rt. 8. That course CLOSED this year.

What is happening here is that from 303 to the South on Rt. 8 to Rt. 82 is being transformed into a 4 lane highway. Rt. 8 "Expressway" ends at 303.

So this whole 10 mile strip is being turned into an expressway. This whole area is getting NEW water, gas lines, electric...in other words, NEW infrastructure. And the surrounding communities are UPDATING theirs.

OK. If you look to the West of Rt. 8, between Boston and Alexanders...you'll find properties that have doubled and tripled in price in the last 18 months. AND, there are some small apt. complexes that will be filled UP in the coming months as the business section booms.

Rt. 82 and Rt. 8 in Macedonia has become one of those Retail Centers that draws people in. With the NEW expressway coming "online" in the next couple of years, we can confidently say that the RE market in that area is still BOOMING...while surrounding areas are still glutted with homes for sale.

IF you know of an EXPRESSWAY project taking place, say North or West of Toronto for example...there might be some INFRASTRUCTURE work going on.

For FUN, find Matthews Thomas Park on OLDE Rt. 8 and zoom in on the homes to the west on Ledgeview Drive and Rockwood Cir and you'll see some of MY favorite homes in the area. Any thing in that area has appreciated at perhaps twice to three times as much as surrounding RE.

That's the power of INFRASTRUCTURE. New highways to prosperity.

Gordon Jay Alexander

PS. And most of the people who live on Ledgeview do NOT Fly Low and Collect the Dough. http://www.flylowcollectdough.com

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, "only a little while."

The American then asked why didn't he stay out longer and catch more fish?

The Mexican said he had enough to support his family's immediate needs.

The American then asked, "but what do you do with the rest of your time?"

The Mexican fisherman said, "I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life."

The American scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise."

The Mexican fisherman asked, "But, how long will this all take?"

To which the American replied, "15 - 20 years."

"But what then?" Asked the Mexican.

The American laughed and said, "That's the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!"

"Millions - then what?"

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

Steve,

Thanks for your additional thoughts.

Let me repeat...

1. I did NOT write down any goals.
2. I did Not write down nor create nor repeat any affirmations.
3. I did Not Visualize anything - I played no Mental Movies or whatever term you want to use to describe visualization.

As This is Intrinsic to The Secret, that I did not do them means I did not use The Secret. Plain and simple. The moment a so-called Law fails is the moment the Law is proven not to be a Law at all. And instead is proven just to be "Post hoc ergo propter hoc" (Post Hoc) a Logic Fallacy which assumes, A then B therefore A caused B.

Is it true that before a person can build a building they need to have a Thought? Yes. BUT, it is also true they they need to Breathe and Consume Nutrients.

Is it true that they create a Visual Aspect of their thought - either on paper or computer screen? Yes. But it is also true that they need to use a writing device to turn their thought into a two-dimensional aspect.

So using the above Post Hoc Logic Fallacy we could now create a new law...

1. You must breathe and consume nutrients.
2. You must have a writing implement.
3. This will give a building.

The Danger in the Secret is in Post Hoc Logic Fallacy. Where you are attributing Results to things that did nothing to actually bring about the result and then saying they are a Must Have / Law.

You can Think otherwise - and believe it at your core - but it doesn't change reality anymore than millions of people thinking the world was flat at their core made the world flat. The reality of a round world existed Despite their thinking otherwise.

Just because I think and then visualize and draw - and then act - to create a building, doesn't mean I need to Visualize/affirm/writedown goals/etc. for anything else. To think that - and thus think The Secret - is to fall for Post Hoc Logic Fallacy.

Just because Think (T), Visualize (V), Draw (D) then Act (A) = Building B...

T then V then D then A = B

Doesn't mean it applies to other areas. That I did what I did without all those steps is proof it it.

Now, there is Validity to Thinking and Acting and between is the Word. But these require a balance - Thought, Word, Action.

Too much thinking is daydreaming. Too much talking is Big Talk (I'm gonna do this and gonna do that and you know the drill). Too much action is a disaster as it's unfocused without the Thought to focus it.

Further, there is this...

Person A is seen to be going for a goal. It is noticed that they...

1. Think about it constantly
2. Have a cut out of the thing they are striving for and dream about it

Therefore, thinking about something and dreaming about something will equal Wanting the thing and natural Striving will take place. That is the wrong way. That is Affirming The Consequent another Logic Fallacy.

Wanting = thinking and dreaming and striving

Thinking and Dreaming /= Increased Wanting/Belief and Increased Striving

You can either accept the logic or you cannot. But "Having A Go" at me in your subtle - it's there but not directly at you - way doesn't change the reality.

If you want to Continue to Debate The Secret - or my Stance against it - then fine. But cut out the Digs which have no place in the debate.

Michael Ross