A Plan To Save Commercial Real Estate

NEW YORK (Fortune) — Economists have long been predicting commercial real estate could be the next day of reckoning for the financial markets, with a wave of defaults looming as billions of dollars in troubled loans come due in the coming months.

But a little-noticed bill introduced in January could help bring a new source of desperately-needed liquidity to the sector: foreign investment.

Introduced by Joseph Crowley, a six-term Democratic congressman representing parts of New York City’s Queens and Bronx boroughs, the Real Estate Revitalization Act of 2010 would eliminate certain taxes that were part of the Foreign Investment Real Estate Property Tax of 1980, or FIRPTA — which requires foreign investors to pay as much as a 55% tax on capital gains from the sale of U.S. real estate or shares in real estate investment trusts and real estate operating companies.

Repealing the tax, Crowley and the bill’s supporters say, would get rid of a major impediment to foreign investment in the sector — and could open the floodgates to new liquidity at a time when commercial real estate loan defaults pose a serious risk to the nation’s fragile economic recovery.

The FIRPTA tax, the bill’s supporters say, penalizes foreign investors who want to put cash into U.S. real estate because those same investors don’t face such taxes when they buy into other U.S. assets, like Treasury securities, corporate equities or corporate bonds.

to read the full article click here

Focus Obsessively and Work, Work, Work…

Having a great business plan, vision or idea is a great slant, but executing it can require an almost neurotic attention to detail, a self-assured devotion to serving the customer and being willing to follow a grueling work schedule. It’s not an effortless road. The rich don’t base their actions on what is easy and what is convenient.

Many of the wealthy relentlessly sweat the small stuff. Roy Roc was famously obsessed with cleanliness in his McDonald’s restaurants. He was fastidious to the point of using a toothpick to clean out the holes of the mop wringer..

Roger Penske, race car driver turned trucking magnet and race-team owner, demanded that workers clean the underside of his race cars daily. And, as Donald Trump likes to say, “If you don’t know every aspect of what you’re doing down to the paper clip, you’re setting yourself up for some unwelcome surprises.”.

The customer is truly king in the eyes of those who made fortunes in the service industry. This based on the reality that disaffected customers can always take their business elsewhere. “There is only one boss–the customer,” Sam Walton used to say. “And he can fire everyone in the company simply by spending his money somewhere else.” Ray Kroc agreed: “If we focus on satisfying our customers and take care of the top line of our business, the bottom line will always follow.”.

Coddling customers and catering to often fickle tastes calls for an unreserved commitment to work. While some may follow the Dale Carnegie model–pick good managers and head home at noon–they are probably in the minority. In fact, says Robert Frank, author of the Richistan replacing the idle rich is a new breed of, “workaholic wealthy who can’t stop building empires even after becoming billionaires.”.

Centi-millionaire Martha Stuart is in a perpetually manic state. Most recently she designed 2,000 household items for Macy’s department store while peddling a line of wines and food along with her other publishing and TV ventures..

Communications mogul Ted Rogers, now 74 is still a notorious micromanager and workaholic. “He doesn’t golf: he doesn’t have hobbies. His company is his life,” said a former executive of Rogers’..

For many, inhuman working hours are de rigueur in the early days of a start-up. In his first six years at Microsoft, Bill Gates averaged just two vacation days a year. eBay co-founder Jeff Skoll who underwent several back surgeries blamed his physical troubles on years of 100 hour work weeks at the company..

Grinding work schedules can sometimes go hand in hand with a penchant of frugality. Mexican industrialist, Carlos Slim Helu, among the world’s richest man works out of an unadorned poorly lit headquarters and admonished employees to, “maintain austerity.”.

Costco co-founder and chief executive Jim Sinegal answers his own phone and wears $12.99 house-brand shirts..

Warren Buffett’s partner, Charles Munger, worth $2 billion is a Costco board member often found shopping at the big-box store picking up golf balls, wine, and even his clothes..

IKEA founder Ingvar Kampred recycles tea bags and drives a rusty Volvo..

And Donald Trump’s centi-millionaire father was known to collect spare nails at his construction site in case he might need them for later use..

Nest week #6–Timing is Everything..

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America’s most overvalued cities

NEW YORK (CNNMoney.com) — Don’t say we didn’t warn you.

In January 2006, CNNMoney published a ranking of 299 U.S. housing markets, showing where home prices were most overvalued. Little was undervalued: Real estate was white-hot and prices were at or near what later proved to be their tops.

A total of 213 cities were overpriced, and Naples, Fla., was deemed the most insane, with 84% of homes valued over a fair market price, according to statistics compiled by National City Corp. and IHS Global Insight.

That finding so rankled the Naples Chamber of Commerce and area real estate agents that they hired economists to dispute the evaluation, according to Richard DeKaser, the real estate consultant who engineered the report for National City.

What a difference four years makes.

Today, Naples real estate sells at a 29% discount and the median home price is just $165,500, down from more than $390,000, according to the newly released 2010 report compiled by IHS Global Insight and PNC Financial Services (PNC, Fortune 500) (which bought National City).

Nationwide, just 87 markets are considered overvalued, and Naples is now the 15th most undervalued area. Nearly all markets — 242 of 330 — are considered priced below fair market.

to read the full article click here

NEW YORK (CNNMoney.com) — First, the good news: Foreclosure filings dropped nearly 10% between December and January.

That’s a total of 315,716 notices compared to 349,519 in December, according to RealtyTrac, which issues a monthly report on foreclosure activity.

Now, the bad news: Filings rose 15% compared to a year ago, and the number of people who actually had their homes repossessed jumped 31% to 87,648.

That year-over-year increase in bank repossessions is what Rick Sharga, a spokesman for RealtyTrac, finds most troubling. “A lot of properties that had been stalled in foreclosure are now going all the way through to auction,” he said.

The repossession numbers for January indicate to Sharga that the nation will probably set a new record for homes lost this year. All that needs to happen is for repossession numbers to stay flat the rest of the year.

And the drop in filings might — or might not — be actual good news. The numbers followed a familiar theme: December foreclosure statistics tend to spike as households cope with increased spending preceding the holidays and end of year financial pressures.

to read the full article click here

Know Your Market… Intimately

Immersing oneself early in a given market can often be the fast track to expertise. Draw material from your own life experience–it is what we all know best.

Know your Market…. Intimately



Budding writers and playwrights are often advised to draw material from what they know best–their own experiences or lives. The business equivalent–know your market inside out.


Multi-billionaire Wayne Huizenga built a one garbage truck company into Waste Management–one of the world’s largest trash hauling companies. Huizenga knew his market instinctively. His Dutch grandfather collected garbage in the late 1800s. At one point during the 1980s, a dozen or so of Huizenga’s family members ran trash-hauling operations. A serial entrepreneur, Huizenga went onto build two more multi-billion dollar companies–Blockbuster and AutoNation.
 


Early immersion in a given market is, in fact, the springboard of many fortunes. As a youngster, James Leprino, whose company supplies mozzarella to the largest pizza makers in the US, helped his father make cheese for his small business.


S. Truett Cathy, founder of Chickfil-A, learned to cook chicken at his mother’s knee after school as a teenager. 
 


Steven Cohen perfected tape trading by studying stock-price movements from a Long Island breakage. 
 


Timber baron Tim Blixseth learned the trade growing up in Roseburg, Oregon. And the stories go on and on.
 



It is absolutely true that marketing the market evolves with time, as is the case of Italian millionaire Flavio Briatore, the son of a schoolteacher. Briatore made his fortune marketing Benetton fashion and a Formula One racing team. Along the way, the 56-year-old jet setter learned firsthand the need of conspicuous consumers. Now, in a venture called Billionaire Italian Couture, he is joining forces with designer Angelo Galasso to sell such spendy items as a $45,000 crocodile jacket and $1,000 belts to his fellow super rich. As Briatore recently told Forbes magazine, “This is the market I know. This is the people I know because I’m rich I know what the people want.”
 



One by-product of market mastery is being able to identify new wrinkles and underserved niches, even in established sectors. “Experts have more highly differentiated cognitive ability,” says entrepreneurial studies teacher Professor Shaver. “They can see opportunities others can’t and figure out how to turn them into a business.” 
 



For example, in the mid ‘80s, Thomas Stemberg was itching to start a business. Stemberg had had an earlier career in grocery store management and was almost tempted to go into the business himself but extensive research lead him to conclude that he couldn’t improve on the existing grocery chains. At the same time, he saw a wide-open underserved market in the office supply business so Stemberg started Staples Inc., the $18.2 billion chain of office superstores.
 



Next week– No. 5 Focus Obsessively and Work, Work, Work…

Gamble, but wisely.

Risk-taking seems to be built into the DNA of the rich. Not surprisingly many are avid card players, such as financier Henry Kravis, Investor Steven Cohen and Carl Icahn and the nation’s most famous bridge partners, Bill Gates and Warren Buffet.

Real Estate and Casino tycoon Phillip Ruffin admits being guilty of playing Black Jack. Poker was entertainment mogul John Kluge’s pleasure during his college years and by the time he graduated from Columbia University in 1937, he had amassed $7,000 in winnings.

For many, the same calculated mind-set applies to business dealings. Motivational speaker and author, Robert Kiyosaki often has this quote cited “People who win are careful with their thoughts not saying ‘I can’t do that’ or ‘I can’t afford that?’ or ‘How can I reduce my risk’ or ‘how can I afford it’.

Where some see risk, these billionaires see opportunity and make calculated bets designed to recoup their investments in a worst-case scenario. They also share an unshakable belief in their own success—a supreme self-confidence that doesn’t factor in fear of failure.

Ted Turner, for one, stared down his critics when he gambled on a 24-hour news station. Today CNN commands audiences of 86 million households worldwide. Rupert Murdosch has a 53-year-record fighting prevailing opinion. Critics thought a national paper would never fly in Australia in the mid 60’s but The Australian is now the country’s top seller.

A tougher call was starting a new TV Network in the United States where ABC, CBS and NBC reigned supreme. Yet Fox Network, which premiered in 1996, has overtaken its rivals in ratings in the past few years. A new venture geared to the ordinary investor Fox Business New Network was off to a bumpy start in early 2008 but with Murdoch’s $70 Billion global media empire behind it, few were betting against its success.

When was the last time you had more than hunch and made a tough business decision based upon strategic thinking and your previous experience?

If you’re an entrepreneur, perhaps often. As risk taking can often be synonymous with making your own luck.

One of the qualities of successful entrepreneurs as well as those of great business leaders is their ability to take risks. Without fear. Without hesitation. And with the solid expectation the result of their risk taking will render a successful outcome.

Making your own luck

Think about the last time you closed a deal. Or the last time your effort paid off in large returns. Was it pure luck?

Forbes magazine recently asked members of its 400 richest list how much of their success they attributed to sheer luck. Responses varied. But none accredits their heaping success to sheer luck alone.

Take multi-billion-dollar real estate developer Jorge Perez, for instance. His path to richness started by building low income multi-family apartments and then transforming them until they eventually became condo towers. Mr. Perez says he assigns 33% to luck and that it takes equal portions of brain and hard work to achieve the success you’re after.

“I consider myself very lucky, especially when I work hard”, says oil and gas man Harold Hamm. “Only a small portion is sheer luck”. One of the nation’s biggest home builder’s, Eli Broad, shares the same sentiment about luck. He believes only 5% of his fortune came from luck and states, “the harder you work, the luckier you get”.

Here’s what other of the richest 400 had to say about luck . . .

Donna Dubinsky, creator of the personal digital assistant (PDA) affirms “luck was clearly an uncanny ability to see the future.” Being convinced her idea of a PDA was a wave of the future, she left Apple to team up with Jeff Hawkins, who created the palm pilot in his garage. The outcome: a 7 billion dollar mobile device that organizes your life!

Renowned motivational speaker and best-selling author of the Rich Man, Poor Man series, Robert Kiyosaki says, “Great leaders can see how a situation will play out and take action in response.”

And what does one of the richest people that everyone on the planet knows—Oprah—believe about luck? Well, she doesn’t believe in luck at all. A few years ago she announced to her TV audience, “I don’t consider myself lucky. I think luck is preparation meeting the moment of opportunity.”

Let me pause and go back to my original question. Has the success you’ve accomplished in the past resulted from pure luck alone?

If you follow the examples of the world’s richest self-made entrepreneurs, you see that luck can be defined as having vision or being flexible or forward thinking. Luck can also be construed as the universe or a higher power supporting you in its miraculous way to give you the courage, passion and relentless commitment you need to succeed.

My suggestion is be prepared to make your own luck because nothing worthwhile will ever come your way unless you put forth deliberate action.

How do so many accumulate so much money while others don’t? There’s no secret that the ranks of the rich and the super rich are exploding. A recent period of prosperity created some 500 billionaires compared to 13 back in 1985. Not to mention, there are now many thousands of households with a net worth of a hundred million or more.

I read about this in U.S. News while waiting at an airport this past week.

One thing’s for sure, anyone who has had an idea and turned it into big money, did so by adhering to some, if not all of the seven secrets I’m about to share with you.

I’ll talk about one each week.

It does not take a super-human intelligence to become rich. It’s not a game where the guy with a 160 IQ beats the guy with a 130 IQ. Nor does it always require advanced degrees. Otherwise… college drop-outs like Microsoft founders, Bill Gates and Paul Allan, or Larry Ellison of Oracle, Apple’s Steve Jobs, and Subway shop founder Fred DeLuca… would never have made it.

A recent published look at the Forbes 400 list reveals… an average 10% each year have no college… and sometimes, not even high school degrees. (I’m actually one of them, I never went to college.)

As a child, George Lucas was awkward, nerdy, with a D minus average. (Not an especially brilliant student.) Like me… except I was cool

But his aptitude for filmmaking was extraordinary… eventually earning him a $3.6 billion fortune… creating such films as the Star Wars trilogy, Indiana Jones, and others.

“[Smart] is an elusive concept. There’s a certain sharpness, an ability to absorb new facts. To ask an insightful question. To relate to domains that may not seem connected at first. A certain creativity that allows people to be effective.”

Bill Gates

More elusive factors like determination, drive and ambition play a higher role.

Sam Walton, Walmart’s founder likes to say…

“I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I don’t know if you’re born with this kind of passion, or if you can learn it. But I do know you need it.”

While passion and determination might drive a person toward action, it takes persistence, the kind of “stick-to-it” behavior that makes failure NOT an option — to cinch the deal.

Starbucks investor Howard Schultz is persistence personified. While working for a small Seattle coffee bean company, he hit an idea of creating Italian style Espresso bars. His boss didn’t buy the concept, so he left, and not before long… he bought out his former employer.

But to grow, he needed money. After pitching his idea to hundreds of potential financiers, he finally received the money he needed.

No amount of education can give you that kind of perseverance.

• Is it possible to buy a property at less than appraised value, but borrow money at appraised value and get “cash back”?
• Is it profitable to invest in the Lower Mainland right now?
• Are there deals in the USA where you can get 30 – 50% off the property value still?
• How does Dario buy and sell properties while on holidays?
• What’s the real deal with Dario?
• An example of how to create equity out of thin air.

December 01 2009 - AskDario Teleseminar

http://www.brewaz.com/story_recent.php?id=7370

Take note of the following:

• These guys are from Vancouver
• They dropped over fifty million dollars
• It’s in Arizona

I think this just adds proof and affirmation to the strategy I’ve been focused on these past two years. This market is scalding hot right now.

Guess where I’m taking my 90 Day Challengers to invest in the United States?

To your Real Estate Success,

Dario Lorenzo

P.S. If you read the article in detail… you’ll find a hint to another market I’ve been hitting up.