IBD's 10 Secrets to Success

As a long time subscriber of the IBD (Investor's Business Daily), I take this list to my heart and try to practice them everyday. These are the 10 traits that IBD found to be common among leaders and successful people:

1) How You Think Is Everything: Always be positive. Think success, not failure. Beward of a negative environment.

2) Decide Upon Your True Dreams And Goads: Write down your specific goals and develop a plan to reach them.

3) Take Action: Goals are nothing without action. Don't be afraid to get started. Just do it.

4) Never Stop Learning: Go back to school or read books. Get training and acquire skills.

5) Be Persistent And Work Hard: Success is a marathon, not a sprint. Never give up.

6) Learn To Analyze Details: Get all the facts, all the input. Learn from your mistakes.

7) Focus Your Time And Money: Don't let other people or things distract you.

8) Don't Be Afraid To Innovate; Be Different: Following the herd is a sure way to mediocrity.

9) Deal And Communicate With People Effectively: No person is an island. Learn to understand and motivate others.

10) Be Honest And Dependable; Take Responsibility: Otherwise, Nos. 1-9 won't matter.

Positive cash flow by John T. Reed

Just found a wonderful, reality driven article on investing in cash flow rental property here. Some of the major points included in the article are:

1) The average operating-expense ratio of residential property is 45% plus or minus 2%. This is invaluable as most sellers/brokers that I came across with either failed to provide a solid income/expense statement or they would grossly under report the expenses and/or over stated the income. Instead of relying on these inaccurate numbers I simply used a 50% expense ratio (higher than what Mr. Reed mentioned in the article but it gave me some extra head room for mistakes).

2) Think from the tenant's perspective. Most people won't pay more to rent than to own. Sure a cash flow positive property is nice, but it is unlikely to find a tenant who would pay rent that covers all your expenses and debt payment (assuming typical financing of 70-80% of the purchase price). Apartment buildings would be less of an issue in this case as the cap rate is generally higher than single family residential.

3) Investing only in cash flow properties is extremely difficult. Reason being by insisting in generating positive cash flow, one must offer a purchase price that might be significantly lower than what other buyers would offer. Most buyers are "appreciation buyers" which means they buy/invest at market/over market price and hope for future appreciation of the property value. A positive cash flow investor will always be outbidded by them and hence never be able to participate in the market.

The Riz Kahn Show interviews Robert Kiyosaki

Here's a great video interview with Rich Dad Poor Dad author Robert Kiyosaki. If you don't have time to read his latest book "Rich Dad's Conspiracy of the Rich" I would highly recommend you to at least watch this 22 minutes interview!



Click here to watch part one of the video on YouTube

Click here to watch part two of the video on YouTube

Cashflow analysis class by Douglas Rutherford CPA

About 3 to 4 years ago when I first started to learn about real estate investment, I was looking for a software that would help me organize my thought as well as keeping track of all the numbers when analyzing a "buy and hold" or cash flow real estate deal. I found a couple of such softwares and eventually I decided on using the "Cash Flow Analyzer Pro" designed by a CPA named Douglas Rutherford. The software was reasonably priced and it was perfect for my need. I used the software to analyze many multi-family properties that I was interested at and it was able to generate some impressive reports after I entered some numbers. Well fast forward 3 years to the present when I learned that Douglas Rutherford is coming to Los Angeles to teach a class on using his software to analyze properties, I signed up immediately for it. We had about 16 students in the class, all of us with laptops loaded with the software so we could all have hands on training with it. I was able have Douglas to answer many of my questions on using the software as well as learning from the questions that other students asked. The information I learned today will undoubtedly help my to better analyze my future real estate investments.

Disclosure: I do not receive any form of payment or referral fee from either Douglas Rutherford himself or his company Rental Software.com LLC. I recommend this product simply because I think it's a wonderful tool in helping investors analyze any buy and hold property.

The confession of a new real estate agent

I confess, I never thought about becoming a real estate agent. I used to hate real estate and thought it's boring. The idea first came across when my mom asked if I would like to learn about real estate from my late uncle, back when I was still in high school. Of course being a teenager completely hooked on to his video games and computer studying real estate would be the last thing in my mind. Now fast forward the time like 15 years or so, after I've graduated from high school, college, and graduate school, after I've started working as a pharmacist for several years, I came across a book that forever changed my life's course. That book, for many people who know me know, is Rich Dad Poor Dad by Robert Kiyosaki. The book has awaken my inner desire to become an investor. I started to study both real estate and stock investing seriously. While I was reading all the different real estate investment books I came to realize by becoming a real estate agent it may give me an advantage in the field of real estate investment. And that's how I became an agent. My goal is to use my knowledge to help myself as well as the others investing in real estate. This will differentiate me from the other real estate agents as my goal is not to make a living out of my commissions (although it's always nice to make some money along the process!).

How I lost $5k to save $15k

Have you heard of Rule #1? For those of you who don't know it was made famous by no other than my idol Warren Buffett. He basically said that rule #1 in stock investing is "Don't lose money." and rule #2 is "Don't forget rule #1." It sounds simple enough and yet cutting losses is probably one of the hardest thing to do in stock investment and I am guilty of often violating this rule #1 myself too. One of the things I do routinely every night is to read the IBD (Investor's Business Daily) that I subscribe to. For anyone who reads IBD you know of all the investment advises they give cutting losses at 7 % to 8% is the rule they stress on the most. The reason of cutting loss early is because it is much easier to make it back. If you wait until your stock is down 15%, 20% or even 50% it would be much harder to recover from it. The stock market has been dropping badly in the past 2 weeks of trading. I was forced to close my position at a loss of 7% on two of my recent purchases. I lost about $5,000 and I was kind of upset about it. Now that when I look back, I'm glad that I did what I did. If I were still holding on to those stocks my loss would have been magnified to $15,000! Although I still consider myself to be a "buy-and-hold" investor as I do not move in and out of a stock to make tiny profits. In today's chaotic market we all need to move quickly to cut loss and protect our capital, and hence following the rule #1 "Don't lose money."

Do I have what it takes to be a successful investor?

This past weekend I spent a whopping whole 3 days attend Ron LeGrand's Cashflow Summit 2009 seminar at the Radisson hotel in LAX. I have been to many events like this one which is essentially a live infomercial of each different speaker's products such as seminar training or software. All of them were wonderful speakers making it "almost" irresistible to buy their products. Well I didn't buy any of their stuffs but I've learned a great deal of things in these 3 days and I plan to study further by reading them on the internet or in books. Anyway while I had a great time attending this free seminar/live infomercial I also realized I'm a minority among my friends and family. What do I mean by that? I found people are often unwilling to sacrifice their time to learn anything about investment. They might be interested in hearing about it, but when they are asked or presented with opportunity to actually take action they often shy away. Perhaps they are being skeptical or they don't want to give up their weekend which is all understandable. After all I too thought it was kind of crazy to wake up before 6am everyday driving all the way to LAX and then stay until 5pm before come home. As crazy as it sounds I did it. I sat through all the presentations and took notes. I came home at night and researched on some of the new things I learned that day. I could have spent the weekend with my family but instead I left them home and went to this seminar. I may still be a long way from the top but I believe I have the determination to get there and become a successful investor one day.