Success

"To laugh often and much;

to win the respect of intelligent people and the affection of children;

to earn the appreciation of honest critics and endure the betrayal of false friends;

to appreciate beauty;

to find the best in others;

to leave the world a bit better, whether by a healthy child, a garden patch or a redeemed social condition;

to know even one life has breathed easier because you have lived.

This is to have succeeded."

- Ralph Waldo Emerson (US essayist & poet, 1803-1882)

A Return to Love

Our deepest fear is not that we are inadequate.
Our deepest fear is that we are powerful beyond measure.
It is our light, not our darkness that most frightens us.
We ask ourselves, Who am I to be brilliant, gorgeous, talented, fabulous?
Actually, who are you not to be?
You are a child of God.
Your playing small does not serve the world.
There is nothing enlightened about shrinking so that other people won't feel insecure around you.
We are all meant to shine, as children do.
We were born to make manifest the glory of God that is within us.
It's not just in some of us; it's in everyone.
And as we let our own light shine, we unconsciously give other people permission to do the same.
As we are liberated from our own fear, our presence automatically liberates others.

Source: A Return to Love by Marianne Williamson

(as quoted by Nelson Mandela in his inaugural address, 1994)

Happy People Are Givers

Excerpt: The Law of Happiness: How Spiritual Wisdom and Modern Science Can Change Your Life, by Dr. Henry Cloud (Howard Books, 2011)

When my older daughter, Olivia, was about three or four, she attended a half-day preschool a few days a week. She loved it and was making lots of friends. One day, before I took her, for some reason we got into a conversation about sharing. We talked about how you can share all sorts of things with others, from love to helping someone, to sharing cookies and toys. I suggested that when she was at school that day, she find someone and share something with her. I thought it was one of those normal on-the-run father-daughter talks. I didn't think much about it.

Later, though, something happened that I will never forget. I picked her up from preschool, and as we were walking around the neighborhood, she began to tell me about her day. I asked her about all her activities, and she told me they had made some cookies and how much she loved them. Then she told me she saw that one of the kids didn't have any, for some reason, so she walked over and gave some of her cookies to him. I thought that was nice but not earth shattering. She had shared things before. What she said next, however, was.

"Daddy, something happened. I don't know what it is," she said as she gave me a serious look.

"What, Livi? What happened," I asked.

"Well, when I gave Brandon the cookies, I felt something in here. Right here." She immediately pointed to her little chest. "It felt really warm in here. What was that?" she asked.

When I heard that, I actually felt like I was going to break apart in tears, but I managed to hold them back. "That was love, Livi. That is what you feel inside when you give things to people. It makes you fell nice and warm inside."

"It feels really good," she said. "I want to do that some more. I like it."

Speaking Makes Me Sexy

On any given night of partying, Wang Yip stands only a one in 30,000 chance of meeting his future wife. Last week Wang delivered a deceptively clever surprise-ending speech, allegedly about how we can use math to predict the probability of extraterrestrial life, but of course, it was really about why Wang is still single.

Hey, I’m single too! And I think I may have figured out how we can improve our odds.

Speaking makes me sexy!

Let me demonstrate. When we sit in the dark recesses of a room, unknown and unnoticed, we are one of 30,000, but when we stand centre stage, we are one in 30,000. Whether speaking at a church of 1,000 members or traveling the nation as a sales trainer, I’ve found that there’s something strangely seductive about the familiarity an audience feels toward someone in the spotlight.

No one needs to know that you may have spent 20 hours preparing to speak for only 20 minutes. The plain truth is that, when we present our best self, we are more attractive.

[This message, of course, wasn’t really about me being sexy. It was an attempt to help my fellow Toastmasters identify what they get out of participation in the club, and what they’re prepared to give in return. What follows is a rough version of the rest of that speech.]

Here are my top three reasons for attending Toastmasters:

1. I genuinely love the people in the room. Many are already good friends; others are well on the way. I look forward to this family of friends every Thursday morning.
2. God created me to communicate. The Dead Sea is not dead because there’s nothing flowing into it; it’s dead because there is nothing flowing out of it. A part of me would die if I didn’t get this opportunity to speak.
3. I crave the comments of others. Where else can we count on constructive criticism each time we make a presentation? 

There are many good reasons for being involved in a Toastmasters group. That’s what we get, but what do we give?

Here’s what I give:

1. When people ask for help I try always to give it. If a fellow Toastmaster has a role that needs to be filled, I’m quick to say yes.
2. It would be a very rare occasion that I don’t make an effort to provide helpful feedback to featured speakers.
3. I stepped up to serve on the Executive Committee this past year. 

What do you give when you’re part of a group? I’d rather hear honesty than apathy. If you’re completely burned out and have nothing left to give, say so. If you think there’s an ounce of energy left; that you might consider allowing your name to stand for an Executive Committee role, then have the courage to say so.

It’s been said that if you can’t speak, you can’t lead. But the corollary – that just because you can speak, you can lead – isn’t necessarily true. That’s why Toastmasters provides two tracks: The Competent Communicator; and the Competent Leader.

The Executive Committee is your opportunity to both give and get. I would love to serve alongside both keen new leaders-in-training and no-nonsense veteran leaders.

So why are you here? We want to hear from you. You are under no obligation to return the form in front of you. But I would be truly honoured if you would hand it to me as you are leaving today. I understand we’re busy, and I won’t judge if you just can’t see yourself stepping up right now. But I would be truly grateful if you would at least consider engaging at a more meaningful level.

Why are you here?

Are you interested in truly gaining full benefit from the Toastmaster experience… or is it just because you think speaking makes me sexy?

Knowing

In the past few days I've had the distinct privilege of walking with a friend as he struggled to complete an MBA assignment. Duane (not his real name) is a highly skilled professional in his field (healthcare) and has courageously taken on the challenge of furthering his education, mid-career.

When Duane found himself stuck on one particular question of an assignment, he did what all intelligent business people do: he called for help. As I listened to Duane's struggle to line up his learning with the case study in front of him, I recalled my own experience as an MBA student. I, too, leaned on the wisdom and experience of others who helped me get through. Cliff (his real name), an accountant, and Michelle (her real name too), an economist, walked with me for two full years. Their support was invaluable.

Nearly fifteen years later, I realize that what seemed so daunting back then, is now really quite obvious. A little education and a lot of experience will do that.

Duane will be just fine. When the classes are finally over and the exams are all written, the case studies will fade back into real life, and eventually, what once seemed so strange will suddenly seem obvious. That's the difference between learning and knowing.

And I will proudly watch as Duane magically mixes old learning with new to create something quite spectacular. And Duane will one day walk with someone else as they struggle through something strange - and he will know!

Remembering

We are reminded today of the brave men and women who have fought to protect our freedom. With poppies, moments of silence, and media coverage of public events honouring our heroes, today is a day for remembering. I find myself reminded today, also, of the man who taught me to remember.

Mr. Wayne Belanger was my high school principal. I recall the annual Remembrance Day Assemblies he led. As a young adult, I was mostly concerned about present day events and all things that revolved around me. I confess that I sometimes found these assemblies long and tedious and, while I understood from my history classes what he was talking about, I never full grasped the relevance.

It wasn't until years later, as I sat in a movie theatre witnessing the opening sequences of "Saving Private Ryan" that I realized what Mr. Belanger was talking about. These kids, who were only slightly older than us, were going to war, and suffering so that we could live in freedom.

So today, Mr. Belanger, I honour you, and others like you, for taking seriously your role as mentors to younger generations. And I take a moment of silence to remember those who have fought, and those who continue to fight - and sometimes fall - for freedom.

How to Find a Genius

Business has been great this year. So great, indeed, that I discovered I was in desperate need of a little help.

About a month ago I ran an advertisement seeking an Administrative Genius. I was immediately impressed by both the quantity and quality of the applicants. In less than 48 hours I heard from 40 people. One person wrote such a compelling cover letter that I had to call her right away. Six others also delivered exceptional cover letters and targeted resumes. I identified an additional four as "maybe's" for a possible second round of interviews. Five others I offered to refer to people in my network who were also seeking assistance. And twenty-four did not present well enough to merit further action.

There may have been some gems in those 24, but they never made it past the first cut. In case anyone is interested, here's how I narrowed the field:

• Anyone who responded in less than 7 seconds (I'm exaggerating only slightly) did not hear from me. How could they possibly have diligently researched me, my company, and the position offered in such a short period of time?
• Grammar, spelling, and formatting errors don't cut it - especially when the specific purpose of the position is to make an employer look good! One person told me they were "consciencious". (If you think about it a bit, it may have been a good idea to spell-check that word!)
• I included a simple test in the offering: "Apply to jobs@SecretHomes.ca with subject line: "Administrative Genius"". Missing this seemingly minor point is a good way to have your resume end up in the wrong file and demonstrates a lack of attention to detail or inability to follow simple instructions. (And, in my mind at least, a "Genuis" is significantly different than a "Genius".)
• Templated Cover letters and non-specific resumes don't get far either. They sort of imply a lack of self-esteem.
• Applicants get no extra points for cover letters or resumes that open with "What I want is... blah, blah, blah". No employer on earth cares about what you want until they have at least a faint idea that you might be suitable for what they want. If the employer is paying for the ad and your salary, try starting with helping them solve their problem. If you're successful, they will be more than delighted to give you what you want.
• Finally, and somewhat curiously, not one applicant used any tool beyond a cover letter and resume to attract attention. For example, part of the posted job description listed management of Social Media. Doesn't anyone have a Facebook or Twitter account they'd want me to see?

I did have the pleasure of interviewing half a dozen very impressive individuals. For the most part, these people made flawless presentations, and were secure enough to take some chances by revealing a personality, rather than false professionalism.

Generally, I learned that one of the main attractors about my ad was that I described the position as one that would allow work from home and in the field, as well as flexible hours. In some cases, the candidate discovered through the interview process that there are trade-offs to this kind of freedom, and that perhaps they really were more suited to a little more structure.

Admittedly, I wasn't entirely certain of what I hoped to find. It is very difficult to describe an ideal position, and then seek to find the perfect person to fit that ideal. It is far more reasonable to find a good person and craft a position around them.

To all forty people who honoured me by responding to my advertisement: Thank-you! It takes great courage to put yourself out there. I know that there are many amongst you I would love to have met. I hope the comments above may in some small way help in your search. To those I met: a special thank-you. My inability to offer you a position at this time reflects more on my needs than your qualifications.

For my part, there is a happy ending. For the past eight months, I've had breakfast almost every Thursday morning with a group of people I've come to know and respect. A chance conversation with one of these people revealed an astonishingly good fit. On Monday, I met with my friend Blaine to begin planning how we could work together. I may introduce him more fully in a future post.

And that is how you find a Genius - look long and hard, but don't forget to look right in front of your nose!

Hey Buddy, Can You Spare Some Change?

How do you respond when someone approaches you in the street and says: “Hey buddy, can you spare some change?”

Even after all these years, I’m still not sure. Let me share a story with you, along with 3 propositions and 3 possible responses.

A few days following my 19^th birthday, I boarded an airplane with a one-way ticket from Ottawa to Calgary. I had $100 in my pocket. Mine was a self-imposed experiment: Could I survive on my own?

Landing in Calgary, I immediately set about finding work. On the first day, I read 2 books at the library on oil drilling rigs. On the second day I presented myself at the office of every drilling company in Calgary. On the third day, I was on an airplane headed for a remote drilling rig about a hundred miles north of Fort St. John.

Working on the rigs paid well, so when I returned, I did so with several thousand dollars, which I immediately deposited into a bank account. I’d made it with $100. My next experiment was to try starting with nothing. My goal was to accumulate just $150 – the price of a flight back to Ottawa.

Well, I didn’t quite have nothing; before making my deposit I’d paid for 7 nights at the YMCA – a tiny room and a warm bed was welcome in February – twelve dollars a night.

The next morning I arose early and full of energy. I was about to prove that everyone who lives in poverty does so by choice and is simply lazy. I headed off to a temporary industrial employer. Sure enough, I waited around for about an hour, and then headed out on a bus to my first assignment. This was going to be even easier than I thought.

At the end of the day, I discovered something somewhat disturbing. I would receive my wages at the end of the pay period – 2 weeks from now! Two weeks! I only have a bed for one week. How am I going to eat?

A minor setback.

Back at the Y that evening I did some research. There was a street corner just a few blocks away where guys would line up first thing in the morning. Trucks drive by and pick up day labourers – and the best part was: they paid cash!

At $4 an hour I needed to work three hours to sleep inside. I dug ditches, I swept warehouses, I unloaded trucks, I cleaned construction sites, one time I even hosed out sulphuric acid sludge from a big white tank somewhere. I got a steak lunch for that one – and a rash!

If I had a choice between sleeping inside or eating, I always chose sleeping inside. Then one day I was carrying ceiling tiles from a stack to a work site. I noticed a workmate making about 1 and a half trips for every one of mine. He asked me when I last ate. “Three days ago”, I answered. My new friend told me where I could get a free meal.

The next morning I showed up at the Single Men’s Hostel. Before receiving a meal ticket, I had to meet with a counsellor. I remember he asked me how much money I had. I reached into my pocket, pulled out a handful of change, and answered: 67 cents.

That morning I discovered the gift of free food. I also learned that scary looking people aren’t so scary, up close. I learned that no one ever complained when the food was only lukewarm, and if the scruffy guy across the table was too hung-over to eat, he was never too hung-over to share.

After two and half months on the streets I learned something else too: It’s almost impossible to get ahead when you’re down. For the first time in my life, I truly felt despair.

My hypothesis failed. I eventually went back to the bank, collected my cash, bought a plane ticket, and flew home.

Here are my three observations:

1. We are all poor. Rev. 3:17 reads: “You say: ‘I am rich; I have acquired wealth and do not need a thing.’ But you do not realize that you are wretched, pitiful, poor, blind, and naked.” People are fragile. Mental illness or an unfortunate string of events can put almost anyone out on the streets.
2. We are all rich. Placed in global and historic perspective, almost anyone living in Canada is fabulously wealthy. We have access to social services providing food and shelter. Many parts of the planet don’t share this luxury.
3. We are all the same. Proverbs 22:2 reads: “Rich and poor have this in common: The Lord is Maker of them all.

So what do you say when someone approaches and asks: “Hey Buddy, can you spare some change?” Here are three possible responses…

1. “Spare some change?! Get lost!”

2. My friend Jim, who lived on the streets for 3 years, says: “Don’t give it to them. Half will spend it on alcohol; the other half will spend it on drugs.” In Canada, homeless people have access to social services. But Jim would also ask you to treat all people with dignity. The only reason he no longer lives on the streets is because someone cared enough to love him when he was unlovable.

3. The third response is yours: What do you do when someone asks: “Hey buddy, can you spare some change?”

Did You Miss Me?

I recently read somewhere that nearly 80% of all new blogs are abandoned within the first 90 days. I can certainly see how! Life gets busy, and frequently communication falls by the wayside.

As a pilot I learned that, when faced with a possible emergency situation, I should Aviate, Navigate, and Communicate - in that order! In other words, keep flying, figure out where you are, and tell someone. I wonder how well that translates to this journey we call life.

My last post here, Take a Break, was nearly eight weeks ago. Did you miss me? I guess I've proven my point.

I have two other blogs. On my SecretHomes blog I reveal real estate secrets and share stories intended to help people buy, sell, rent, or invest in real estate. On my Kingdom Business Group site I explore the integration of faith and work, and seek out virtuous business opportunities.

In an effort to free up some time to communicate more regularly on all three, I'm looking for a really good Administrative Assistant. I have some thoughts I'll share on that tomorrow morning...

I'm becoming a big believer in the value of sharing ideas and hearing from others, and I'd love to hear from you.

Take a Break

Many years ago when I was a Maitre d', Gerry Gourmlay was one of my favourite waiters. However, I'd like to tell you about the one time he made me more than a little anxious.

The dining room was packed. All the other servers were busy in their sections, but Gerry was nowhere to be found. I searched everywhere and finally discovered him, relaxed and sitting on an overturned container outside the kitchen door, savouring a cigarette.

"What's the deal Gerry!?" I asked with, I'm sure, a trace of panic in my voice.

"Jeff, everyone in my section is happy. Nobody will miss me for 5 minutes." Gerry was right. Gerry was almost always right. When we do our very best in the service of others, we both need and earn the freedom to take occasional breaks.

Slow down a bit today. Take a break. No one will miss you for a few moments.

Tenant-First Rent-to-Own Investment Model

Executive Summary:
The Basic Residential Real Estate Investment Model demonstrates our ability to generate superior investment gains through prudent use of leverage secured against hard assets.

Rent-to-Own builds on this model by enabling a tenant to ultimately own a home they are renting. Advantages to an investor are many: reduced initial capital investment; increased monthly cash-flow; reduced maintenance and management; a predefined exit strategy; and quicker turnaround of capital.

Here’s how it works. A future purchase price is established in advance. The tenant/buyer pays a non-refundable deposit (option) securing their right to purchase at that price. This deposit becomes part of their future down-payment, along with any additional instalments. We then work with the tenant/buyer to help them qualify to purchase from us outright within one to three years.

This strategy is ideal for good tenants who would rather own than rent, but have not yet saved a full down-payment, or for those who may not yet qualify through traditional means. Tenant-First simply means that we find people, rather than properties. We allow them to shop and select a home of their choosing, and then negotiate and close on their behalf.

Why Work With Partners?

Ready access to capital and credit enables us to immediately begin selecting and working with prospective tenant/buyers. The Capital Partner benefits by participating in returns that would be otherwise unattainable.

I’m often asked if there are many of these deals out there. Of course not! If there were, everyone would be doing this. We use a variety of sophisticated lead generation systems including our www.SecretHomes.ca website to attract and screen tenant/buyers. While the concept of rent-to-own may be more common than you would expect, closing deals requires knowledge, skill and ability.

There is risk associated with all investment activity

Case Study

This is the same property profiled in the Basic Model. Potential returns are better because the Initial Financial Contribution is offset by the option/deposit, and cash-flow is increased through regular down-payment instalments and by eliminating property management from the budget.

You will note that there is a fee for acquisition and project management. This covers lead generation and general costs associated with full-time attention to the investment.

These projections are based on actual rent ($1335/month); mortgage payments ($588/month); property tax ($1,380/year); and condo fees ($195.50/month). I have assumed that an additional $150 per month will be contributed toward down-payment.

CASE STUDY (Stonewood Village)
Appraised Value	$204,000
Purchase Price	$198,000
Tenant Deposit (minimum 3% of Appraised Value)	$6,120
Acquisition & Project Management Fee (1% of Purchase Price)	$1,980
Initial Investment (DP + cash to close + light renovations + fee - Tenant Deposit)	$40,760
First mortgage (80% loan-to-value)	$158,400
Second mortgage (VTB)	$0
Year 1 cash-flow ((Rent + Additional Deposits) - PITC) x 12)	$7,032
Year 1 cash-on-cash return	17.25%
Year 1 mortgage reduction (35 year amortization; 2.75% variable interest)	$2,730
Year 1 gain (cash flow + principal reduction)	$9,762
Year 1 return on investment assuming 0% appreciation (gain / investment)	23.95%
Estimated 3-year value (locked-in 3.5% annual appreciation)	$226,178
Estimated 3-year mortgage balance	$149,977
Estimated 3-year gain (value + cash-flow - deposits - mtg. balance - investment)	$45,017
Estimated 3-year return on investment (3 year gain / investment)	110%

Capital Partner:

The Managing Partner finds, negotiates, and administers the investment from beginning to end. A Capital Partner supplies initial capital and credit, is fully secured on title and, upon disposition receives return of all funds invested, plus participation in 50% of net profits, as fully described in the Joint Venture Agreement.

Using the Case Study above, the Capital Partner’s projected net gain and return on investment is calculated as follows:

Calculation of Capital Partner 3-Year ROI
Estimated 3-year gain	$45,017
50% of 3-year gain	$22,509
Divide by Initial Investment	$40,760
Capital Partner return on investment (3-years simple interest)	55%

This post is provided for information purposes only. It is not intended to solicit investors.

The 22 Immutable Laws of Marketing

I recommend "The 22 Immutable Laws of Marketing", by Al Ries and Jack Trout, to absolutely anyone in business. Here are the chapter headings... or maybe you should just buy the book.

1. It is better to be first than it is to be better.
2. If you can't be first in a category, set up a new category
3. It is better to be first in the mind than to be first in the marketplace.
4. Marketing is not a battle of products, it's a battle of perceptions.
5. The most powerful concept in marketing is owning a word in the prospect's mind.
6. Two companies cannot own the same word in the prospect's mind.
7. The strategy to use depends on which rung you occupy on the ladder.
8. In the long run, every market becomes a two horse race.
9. If you are shooting for second place, your strategy is determined by the leader.
10. Over time, a category will divide and become two or more categories.
11. Marketing effects take place over an extended period of time.
12. There is an irresistible pressure to extend the equity of the brand.
13. You have to give up something to get something.
14. For every attribute, there is an opposite, effective attribute.
15. When you admit a negative, the prospect will give you a positive.
16. In each situation, only one move will produce substantial results.
17. Unless you write your competitor's plans, you can't predict the future.
18. Success often leads to arrogance, and arrogance to failure.
19. Failure is to be expected and accepted.
20. The situation is often the opposite of the way it appears in the press.
21. Successful programs are not built on fads, they're built on trends.
22. Without adequate funding, an idea won't get off the ground.

Investing in Rent-to-Own Property

Investing in Rent-to-Own Property:

A Complete Guide for Canadian Real Estate Investors

Mark Loeffler (Mississauga, ON: John Wiley & Sons, 2010), 186 pages

Mark Loeffler’s “tenant-first rent-to-own” strategy is truly a winner for all parties! My only criticism is with respect to style so I’ll get that out of the way now: this book might have benefited from tighter editing. That aside, Loeffler clearly explains and outlines each step of this investment strategy in sufficient detail to be of tremendous assistance to any active real estate investor.

Part 1 lays a firm foundation for the chapters to come by providing compelling reasons why one should explore this approach, and then clearly and comprehensively describes how to start, and who you need to know.

Part 2 is a rich resource for identifying and sorting prospective clients, and one that should be referred to and mined frequently for continually growing a client list.

Part 3 briefly describes how to find and purchase property which is certainly sufficient for seasoned investors, but beginners would do well to seek additional education and coaching in this area.

Part 4 will be a HUGE time, money, and mistake-saver for most new rent-to-own investors! Both here and on his website (www.theversatileinvestor.com) Loeffler generously shares forms and contracts developed through his own trial and error.

This book wraps up with two helpful sections. The first, called Tenant FAQs, enables the investor stay a step ahead in the process. The second, Worst-Case Scenarios, attempts to alleviate fear and encourage action.

This title turns light reading on significant strategy. Loeffler does an adequate job of describing the rent-to-own process with a terrific tenant-first twist. I readily recommend this book to fellow real estate investors and thank Mark for sharing his experience and insight.

Do You Require Technical Assistance?

I have an absolutely brilliant friend named Eric. He is extraordinarily intuitive and has a natural gift for business. When I first met him about five years ago – among other qualifications – he had recently graduated from a program in information technology.

One day, when working on a project together, I was having difficulty with my computer and asked Eric what I should do. When he said he didn’t know, I responded in mock shock: “What did they teach you in school?!”

Eric told me he only learned two things:
1. Almost any computer problem can be solved by rebooting; and
2. Never patronize the client.

Eric has come a long way since then. I have had the distinct pleasure of working with him again over the past few weeks. When unable to view a website update in my browser, I received this response to my request for assistance:

“I would suggest clearing your cache, your cookies, restarting, turning off your computer, turning it back on, trying in a different browser, typing in the address manually, trying with and without the "www", changing your internet provider, calling the geek squad, and buying a new computer, not necessarily in that order.”

Of course, Eric was right – and I hardly felt patronized at all!

Enter code: SAVE20 at Soundview Executive Book Summaries and take $20 off an Online Premium Subscription! Expires 7/31/10.

Getting Naked

A Business Fable about Shedding the 3 Fears that Sabotage Client Loyalty

by Patrick Lencioni (Jossey-Bass, 2010) 220 pages | Summary: 8 pages

It’s probably not fair to review a summary, so I’ll just offer a few quick impressions of the wisdom offered in this well-written Executive Book Summary from Soundview.

In only eight pages, the editor does a superb job of condensing the storyline of a fable while retaining the key points of Patrick Lencioni’s book.

In Getting Naked, Lencioni bravely introduces the themes of vulnerability and suffering into business practice by showing how humility, selflessness, and transparency -- for the good of the client -- make good business sense.

I especially appreciated Lencioni’s focus on relationship as rationale for giving business away, and his simple explanation for why having a bad client is worse than having none.

Getting Naked provides helpful perspective for Management Consultants, Financial Advisors and Professional Practices. Buy the book or subscribe to Soundview Executive Book Summaries to fast track your business reading.

The RRSP Secret

The RRSP Secret:

Defend and Build Your Wealth with This Powerful Investment Strategy

Greg Habstritt (Mississauga, ON: John Wiley & Sons, 2010), 236 pages

Greg Habstritt’s first book, The RRSP Secret, makes a significant contribution in the realm of personal finance in Canada.

This is not a novel, so I’ll give away the secret: the subject matter deals with investing in Arm’s Length Mortgages. “Why do you think the biggest financial institutions rely on mortgage financing as their bread-and-butter business? It’s because it is so profitable!” (70) Sophisticated investors have long used this strategy in their personal portfolios. Greg shows readers how almost anyone can.

Greg describes arm’s length mortgage investing as: stable and predictable; able to consistently produce double-digit returns with controllable risk; not requiring payment of commissions/fees to advisors/‘experts’; virtually immune to what markets are doing; and 100% eligible for your RRSP, RESP, RRIF, TFSA, and LIRA. (69)

The Introduction suitably sets the stage and provides a personal connection with the author. Many Free Bonuses are available by registering yourself as an owner of the book on Greg’s www.rrspSecret.com website (which also adds you to his growing database and impressive marketing machine).

Part 1, What the Financial Industry Doesn’t Want You To Know, is extraordinarily informative, readable, and intentionally disturbing.

Most readers will recognize themselves in a chapter devoted to investor bias. “Any time you invest in something you don’t understand, you’re gambling, not investing.” (7) Habstritt believes that “a direct indicator of how successful you will be in life (not just financially) is based on your willingness to be accountable for your results.” (9)

In this section Habstritt reveals how the financial industry really works and how the government uses RRSPs to generate tax revenues. He uncovers the unfortunate truth about the limited availability of truly unbiased financial advice, and turns some well-worn ‘truisms’ on their head. By way of example, here’s what Warren Buffet has to say about diversification: “Wide diversification is only required when investors do not understand what they are doing.” (43)

In Part 2, The Best-Kept Investing Secret for Canadians, Habstritt tackles the task of describing mortgage investing step-by-step, including finding and evaluating opportunities, setting terms, and managing risk. This section, while packed with information, is considerably less readable.

One of Habstritt’s challenges is that he’s addressing two audiences: lenders and borrowers. Happily, the end result is a balanced presentation useful for any party willing and able to sort through the comprehensive detail provided.

If you’re wondering if this book is for you, simply start at the back and read the short section entitled Conclusions, where Greg explains why he wrote it and shares two third-party success stories. I recommend Greg Habstritt’s The RRSP Secret to anyone willing to learn and employ one simple strategy to strengthen their financial future.

It’s Not About the Speech…

A former mentor of mine, Floyd Wickman, who commanded speaking fees in the tens of thousands of dollars, once shared with me how he was able to almost mystically captivate his audiences. Would you like to know his secret?

I’ll give you a hint: It’s not about the speech – it’s about the audience!

Floyd explained that, in any audience, there are only ever ten people. Wouldn’t it be great if you knew everything you needed to know about all ten of them before you ever stepped up to a podium or onto a stage? Well you can…

Classic speaking theory suggests that most speeches fall into one of three general purposes: to entertain, to educate, or to motivate. Floyd showed me, that in order to really connect with your audience, you need to do all three – every time.

Entertain

We all love to be entertained. For a speech to be entertaining, it doesn’t need to be uproariously funny; it only needs to be enjoyable and perhaps divert our attention for a few moments. As I write this, Shrek 3 is in theatres. Although I’ve not seen this one, it no doubt delivers a childlike storyline and moral for the kids, cleverly combined with more sophisticated diversions for mom and dad.

Educate

One of the most common purposes of a speech is to educate or inform. This involves helping people to learn about a new subject, develop a new skill, or learn more about a familiar subject. Many workplace speeches are intended to inform.

Motivate

To motivate or persuade requires changing an audience’s attitudes or behaviours. Change rarely comes easily, so this can be one of the hardest tasks of a speaker. However, if done effectively, it can also be one of the most rewarding. Sales presentations and high level vision talks are good examples of speeches intended to motivate.

Your Audience

But it’s not about the speech; it’s about the audience. So who are these ten people in your audience?

The first three only want to be entertained. These may be your toughest customers. They already know everything they need to know about your subject – in fact they may know more than you do. What’s worse, these are the people that are already out there doing it! They certainly don’t need to be motivated. They may be asking themselves why they’re even wasting their time listening to you. Ah, but if you can entertain them, they could become your biggest fans.

The second three people only want to be educated. These people are hungry. They come with notepads and poised pens. They want to learn. So if you merely entertain or motivate, they’ll go away feeling cheated. But if you leave them with memorable information that will help improve some part of their life, they will be very glad they came.

The third three people in your audience only want to be motivated. These people are having a bad day, week, month, or year. They’re thinking: “I already know everything I need to know – I’m just not doing it! So don’t try to teach me and don’t just entertain me!” However, if you can move them to finally take action, they’ll love you forever.

And what about that tenth guy? Well, for whatever reason, no matter what you do, you’re never going to get through to him. He’s probably in the wrong room. Maybe he meant to attend a session down the hall and is just waiting for an opportune time to get up and leave without drawing attention to himself. You will never be able to completely satisfy everyone in every audience.

Inspire

It’s not about the speech; it’s about the audience. Merely delivering a speech will get you only so far. Entertaining, educating, and motivating, combined with inspiration, will transform audiences. To inspire literally means ‘to breathe life into’.

Several months ago, Bruce Springsteen appeared with Elvis Costello on a wonderful show called Spectacle. Between powerful performances, Bruce described how he wants to write and perform in a way that connects with real people. There are loads of talented musicians, singers, and songwriters, but only a handful can do this. Bruce approaches his craft with a passion for transcendence by being “up in the heavens and connected to the earth” with “music that’s rooted, and at the same time, flying.” Arguably, Springsteen has succeeded.

Now breathe in. As you prepare your next speech, think about how to entertain, educate, and motivate every time, and begin to breathe life into your audiences.

Remember: It’s not about the speech; it’s about the audience!

Wholesale-Hybrid Real Estate Investment Model

Executive Summary:

The Basic Residential Real Estate Investment Model demonstrates our ability to generate superior investment gains through the prudent use of leverage secured against hard assets. This involves acquisition, at or slightly below market value, of homes that are in generally good repair. These are essentially retail investments.

Wholesale investing involves purchasing homes, in need of more major repairs, at discounted prices and adding value through renovation. These opportunities are found through court-ordered sales or from otherwise motivated sellers. Acceptance of wholesale offers requires the ability to pay cash and to close quickly.

When renovations are complete and a qualified tenant is in place, new conventional first mortgage financing can be put in place. This means that an investor may then be able to extract up to 80% of the improved market value. Ultimately we are controlling the same asset, but with significantly less capital.

Adding value through renovation, and this more sophisticated use of leverage, translates into higher returns. Capital raised through refinance can then be redirected to the next project – thus recycling the down payment.

Why Use an Equity Partner?

This is by far the best question I have received. Real estate investors routinely target returns of 20-40%. They just don’t usually share them with you!

It is certainly possible to arrange short-term debt (bridge financing) through private or commercial lenders. Interest rates are naturally higher than conventional financing, but not unreasonable. The problem is that each deal requires at least some new capital, and additional credit when it comes time to refinance. Eventually I will run out of both.

An equity partner is in for the long haul and shares in gains through renovations, as well as cash flow, mortgage principal reduction, and appreciation. Ready access to capital and credit enables us to find and close better deals.

There is risk associated with all investment activity

Seasoned investors identify, mitigate, and manage risk. The lowest risk real estate investments are single-family homes. Townhouses have fewer variables when it comes to renovation – interior only – so there is reduced likelihood of error in estimates. We are minimizing down payment, but not equity, and we are fully secured on title.

These wholesale purchases do however require cash up front, and the luxury of conditions, inspections, and written estimates may be significantly lessened.

Case Study:

This is the same property profiled in the Basic Model. After Repaired Value and rental assumptions are the same. The reason returns are so much better is because of the wholesale purchase price, value added through renovations, refinancing, and most importantly, because the same asset is controlled with less capital.

Wholesale-Hybrid Model (recycling down payment)
After Repaired Value (retail)	$204,000
Unconditional Cash Purchase Price (90% of ARV less Renovations)	$163,600
Seller Financing	$0
Closing, Carrying Costs & Contingency (3 months)	$4,400
Full Interior Renovations	$20,000
Initial Financial Contribution (Purchase + Renovations + Carrying)	$188,000
Refinance with new first mortgage (80% loan-to-value)	$163,200
Acquisition & Project Management Fee (2% of ARV)	$4,080
Capital Investment Remaining after Refinance (initial + fee - mortgage)	$28,880
Year 1 cash-flow (rent - PITCM)	$4,219
Year 1 cash-on-cash return	14.61%
Year 1 principal reduction (35 year amortization; 2.5% variable interest)	$2,868
Year 1 gain (cash flow + principal reduction)	$7,087
Year 1 return on investment assuming 0% appreciation (gain / investment)	24.54%
Estimated 5-year value (assuming 3.5% annual appreciation)	$242,288
Estimated 5-year mortgage balance	$143,315
Estimated 5-year gain (Value + cash-flow – mortgage balance – investment)	$91,188
Estimated 5-year return on investment (5 year gain / investment)	316%

Capital Partner:

The Capital Partner’s projected net gain is calculated as follows:

Calculation of Capital Partner 5-Year ROI
Estimated 5-year gain	$91,188
50% of 5-year gain	$45,594
Divide by Capital Investment	$28,880
Capital Partner return on investment (5-years simple interest)	158%

A Final Note:

This post is provided for information purposes only. It is not intended to solicit investors.