WHAT YOU NEED TO KNOW WEDNESDAY!!

Hey Friends,

The blog today, I borrowed off of Robert Kioyasaki from the great series of Rich Dad Poor Dad book! It puts a lot into perspective on Why some folks make more money than others.

Enjoy your read!

Why Some People Are Richer Than Others

by Robert Kiyosaki

I was speaking on financial intelligence a while back to a group of university professors in Singapore. At the end of the talk, one of the professors asked me:

"Where did you learn about business and why do some people make more money than others?"

Responding to the first half of his question, I referred to my book Rich Dad Poor Dad and explained to him that I had a father who was just like him, a respected and highly intelligent career educator. My other dad, my best friend's father, who also spent many years raising me, was a school dropout, but was a natural financial genius. My business education came from him.

Thinking rationally vs. thinking emotionally

To the second half of this question I replied: "The best business school I attended was Vietnam. In Vietnam I learned what I believe to be my most important life skill."

"And what is that?" the professor asked.

"To know if I am thinking rationally or emotionally," I replied. "While in combat, l learned to be a master of my emotions and to think clearly, even under extreme pressure."

I went on to tell him of a day in 1972 when the engine of my helicopter gun ship suddenly quit. There was a loud bang and then deathly silence followed by the most horrible of sinking feelings. We were falling out of the sky like a huge rock. Every part of me was screaming, "Pull back on the stick and add power." But my three years of pilot training had taught me to think rationally and override my emotions. Instead of pulling the nose of the aircraft up, I pushed the nose of the aircraft down and dove the aircraft straight for the ocean below me.

To this day, my mind is burned with the vision of the deep green ocean coming up at me at blinding speed. As we faced what appeared to be our certain death. If I had done what I felt like doing, which was pull the nose up, I would have died that day, taking four other people with me.

Most people live in fear of losing money "And how has being the master of your emotions been important to your success?" the professor inquired with even greater curiosity.

Wanting to stay in his world, I replied using his frame of reality, "Have you ever had very smart students with great grades go out into the world and not do well financially or professionally?"

The professor nodded.

"When it comes to money," I replied, "it is the emotion of fear that keeps most people poor. Most people live in fear of losing money or risking money so they say things like 'play it safe' or 'don't take risks.'"

The professor immediately interjected, "Are you saying be careless? Live dangerously?"

"No," I replied. "all I am saying is that you need to know when you are thinking emotionally and when you are thinking rationally. When you are emotional, thinking rationally is often the hardest thing to do.

"Money, sex, religion, and politics are emotional subjects. So when it comes to those subjects, most people are not thinking rationally. When it comes to money most people are so afraid of losing that they wind up losing. That is not too intelligent."

The professor was beginning to nod his head.

I continued on, "Another example of emotional thinking versus rational thinking is when someone says, 'I don't feel like doing it.' Many people are not successful because they let their feelings do the thinking for them. "

For example, every morning I get up and say, 'I feel like going to the gym,' but hopefully my rational mind overrides my emotional mind and sags. 'Come on, one hour, and it's over.' If my rational mind wins I ride my bicycle to the gym, and if my emotional mind wins, I snuggle up in bed for another hour."

How you respond to fear makes the difference "And to you, that is the primary difference between successful people and unsuccessful people?" asked the professor.

I nodded my head.

"When it comes to money, I am often going in when most people are getting out. Or I take risks, while the masses are playing it safe.

"I feel the same fears they do, I just use my mind differently. That ability to do what is necessary, in spite of my feelings screaming at me to do otherwise, is the single most important life skill I have learned."

"But aren't you afraid?" asked the professor.

"Yes." I replied strongly. "I have the same fear as everyone else. It's how we respond to that fear that makes the difference. As I said, most people would have pulled back on the stick when the engine died, and l was trained to push the nose forward.

"The same thing happens financially. People pull back, play it safe, terrified of making a mistake, while life's opportunities pass them by."

The professor seemed to be understanding so I kept going.

"There is another aspect of fear that also causes people to lose money, and that is the fear of ostracism, reportedly the number one fear of most humans."

"Why the fear of ostracism?" asked the professor.

"Ostracism is the fear of being different, or standing alone, or being ridiculed by peers. That fear causes people to conform rather than risk being different. In Australia it's called the 'Tall Poppy Syndrome.' In investor language, the fear of ostracism leads to the 'thundering herd' mentality.

"The fear of being different causes people to band together, so they wait for social proof that what they are doing is right. It is also called the 'madness of the crowd.'

"So they enter markets late, buy what their friends are buying, and get slaughtered. After an experience like that, they spend the rest of their lives living in perpetual fear, continuing to go along with the rest of the crowd that is not going anywhere financially."

"So how does that affect financial intelligence?" asked the professor.

"Financial intelligence is a 50/50 proposition." I began to summarize slowly. "50% of financial intelligence is what you learn in business school, or in my case what I learned from my rich dad. It is the so-called technical knowledge about money, accounting, finance, investing, and business.

"The other 50% of financial intelligence is knowing when you are thinking rationally and when you are thinking emotionally. To simply say, 'play it safe' is not a rational thought because it is a thought that is generated out of emotion. To say, 'play it smart' is a thought coming from the rational brain. It is that 50/50 relationship that is the basis of financial intelligence, and to answer your original question, why some people make more money than others."

For any questions, please comment below. For investment services, leave a message at 314-246-9484 ror you can email at dhibb99@gmail.com

Tip of the Day Tuesday!!!

5 Tips to Raise Your Credit Score Fast

Here's a video.

GO TO

http://www.youtube.com/watch?v=CQyK0vWMYHQ&feature=youtube_gdata_player

Monday Main question of the day!!!!

Should I become a full time real estate investor?

Many self-acclaimed real estate gurus state that everyone should quit their jobs and immediately jump into real estate investing full time. They often claim incredible results from students with little experience.

Life-changing decisions are not usually that simple, and full-time investing is not for everyone. Let's discuss some pros and cons of full-time versus part-time investing.

The full-time investor
Investing in real estate on a full-time basis offers several advantages over a part-time commitment. Being successful requires you to develop knowledge in many aspects of real estate, and more time focused on real estate leads to greater knowledge.
The more your learn, the more you earn, since you do not need to rely on as many professional services or partners for help. You also learn to recognize a deal (or a dud) faster, which gives you more time to do more business or spend with your family.

As a full-time investor, you work your own hours. When we say "full-time," that may mean as little as twenty hours per week if you are good at finding deals. The rest of your time can be spent pursuing other vocations or hobbies.

Or, if you are so inspired, you can work forty or more hours and use the extra cash flow to buy rental properties or diversify your holdings in the stock market. The point is that you need to satisfy your cash flow needs before you can start "investing" your money.

One final point you should consider is whether you want to be "self-employed." If you have always worked for someone else, being your own boss sounds very attractive.

In some, respects, this isn't quite the truth. Being your own boss means being an accountant, bookkeeper, stock clerk, receptionist, and office manager all in one.

You have to do deal with tax returns, payroll, office supplies, customer service, bills, and all the other hassles that come with a business. You don't have friends to chat with at the water cooler. You don't have paid health insurance, a company car, and a 401(k). You take your problems home with you every night.

Sound like fun? It is--once you learn how to master your time and run your business. Being the master of your own life and career is well worth the other hassles of dealing with your own business.

The part-time investor

The part-time investor holds a "regular job." This may be by choice or for the time being until his real estate ventures are bringing in enough cash to quit his job. If it is the latter, don't quit your job because the real estate "guru" told you so. Quit your job when it is not worth the income that it brings you.

In other words, if you are making more money per hour flipping houses on the side, you are at the point that where your regular job is costing you money. Only then, is it time to quit!

One of the advantages of starting out part time is that you can maintain cash flow while learning the business. It may take weeks or possibly months to find your first deal. That same deal may take several months to turn around, especially if you decide to fix it and sell it retail.

Think twice before telling your boss you're leaving. You will have plenty of time to make the career switch once you have real estate experience. You may, on the other hand, like your occupation. If so, continue to work at it and invest in real estate on the side.

The best case scenario (if you are married) is to have one spouse work a regular job. The other spouse works the real estate business for creating wealth, retirement income, and a nice college fund for the children.

Of course, in today's market, you could be laid off due to unforeseen circumstances. If you earn additional income flipping houses and invest the proceeds into rental properties, you will be covered if your main income is lost.

This is especially the case for married women who often forego a career and raise a family only to find themselves divorced with no means of making a living. I don't want to sound cynical about marriage, but with a fifty-percent divorce rate in America, it never hurts to have a system for making money.

Someone with a full-time job tends to have little free time to focus on real estate. A part-timer should learn most of the same skills as a full-timer. Thus, the key disadvantage to flipping houses on a part-time basis is that it takes sacrifice to learn the business. Something has to give. Television, lazy weekends, meaningless hobbies, and even some family activities must be compromised.

As with any education, time spent learning about real estate will bring its own rewards, especially if the people in your life understand your goals and your plan to achieve them. If you are married, make sure your spouse reads this material with you and participates in the fun process of making money.

Treat real estate as a business
People are lured to real estate because of the quick buck it promises. Don't hold your breath; you won't get rich quick. An "overnight sensation" usually takes about five years. More than ninety percent of the people who take a real estate seminar quit after three months.

Real estate investing should be treated with the seriousness of a career. It takes months, even years for a business to cultivate customers and have a life of its own. You need to treat it like any other business.

For any questions, please comment below. For investment services, leave a message at 314-246-9484 ror you can email at dhibb99@gmail.com

Facts Friday!!!

Do you Still owe The Bank After Foreclosure?!?! Education from the agent to the homeowner

Do the homeowners still owe the bank money after a real estate foreclosure? That is a good question. When you negotiate a successful short sale, keep in mind that the agreed upon price is payment in full.

However, the homeowners may still owe the difference between the mortgage balance and the discounted amount as a result a "deficiency judgment." If granted, this judgment will affect the homeowners and their credit report just as any other judgment.

You must get the bank to accept "payment in full without pursuit of any deficiency judgment." You need to explain to them that the discounted amount (the difference between the mortgage balance and the short sale) may be declared as income on their income tax return by means of a "1099."

Since the homeowners have been under such extreme duress and probably haven't made much income, a 1099 may not adversely affect them. They can speak with an accountant for advice.

What is a 1099?

The 1099 is given to the homeowners as a result of income they've received. For example, if the bank is owed $100,000 and agrees to accept $65,000 on a short sale, they actually made $35,000 (the short sale amount) and can receive a 1099 for that amount.

You must explain this to your homeowners when discussing a short sale and advise them to speak with an accountant as to how a 1099 might affect them.

For any questions, please comment below. For investment services, leave a message at 314-246-9484 or you can email at dhibb99@gmail.com

Do It Yourself Thursday!!!

How to patch Those Small Holes in Your Walls!!! Check it out!

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What you need to know Wednesday!!!

What is a balloon note?

When investing in real estate notes, there are options available to avoid balloon payments. Balloons have been called "foreclosures in embryo." These four techniques are ways to avoid or minimize the impact of balloon payments.

1. Balloon payment extension rate
Instead of a balloon payment, the interest rate could increase at a certain time. For example, at 60 months, the 10% interest rate may jump to 15% or some other rate. What would the seller do with the cash if he or she were paid off?

Plug into the note a rate that might make the seller happy with their rate of return. A higher rate may encourage the buyer to refinance, which would accomplish the same purpose.

2. Balloon payment--sell the note
Five years into the note, the note may be well seasoned with a good payment history. At that time, the note could be sold for cash to a paper investor.

If there were originally a balloon, it could be structured that with a good payment history and an acceptable loan to value (LTV) ratio based on current property values, the note could be extended for another five years.

This seasoned, short-term real estate note with a good payment history could be sold for little discount.

3. Bubbles instead of balloons
A small balloon payment for less than the full amount of the note is sometimes referred to as a bubble. What are the seller's needs? Could smaller lump sum payments over a few years meet his needs?

As a note broker, it is sad to see sellers sell a large note and take a big discount just to get a small amount of cash. At other times, sellers receive balloon payments then turn around and put it in the bank at half the rate they were getting on the note.

4. Partials instead of balloons
One way for a seller to receive cash is to arrange to sell the next few years worth of payments to a paper investor instead of a balloon payment in 60 months.

For any questions, please comment below. For investment services, leave a message at 314-246-9484 ror you can email at dhibb99@gmail.com

Tip of the day Tuesday!!!!

Hey Everyone!

Check out these tips on how to find and choose a great realtor!

http://www.youtube.com/watch?v=1X6Z_j00BZU&feature=youtube_gdata_player

Main Question of The Day Monday!!!

How Does a Short Sale Affect a Credit Score?

The #1 question my students are asked by distressed homeowners is: How does a short sale affect my credit score? Let's define what a credit score is first before we embark on how a short sale affects your score.

Your credit score is actually a formula developed and maintained by a private company called Fair Isaac Company, Inc. The score is determined on a weighted scale with:

Payment History, and

Amounts Owed

weighted far heavier than...

Length of Credit History

New Credit, and

Types of Credit Used

[See FICO Basics for a more detailed explanation.]

Since Fair Isaac invented and continues to maintain the credit score formula, naturally we should ask them how a short sale affects a credit score. The question posed to MyFICO.com was:

"How does a foreclosure or short sale affect my score?"

Their response was:

"Credit bureau reports are limited in how they represent foreclosures today, so it's generally not possible to tell from the credit report if a reported foreclosure is a short sale, deed in lieu of foreclosure, settled account, regular foreclosure, or some other variation.

The FICO score treats all of these descriptions that appear on credit reports as serious delinquencies, so they have an impact on the score similar to the impact from a charge off, tax lien, or account included in bankruptcy."

Not what you were hoping for, huh? Well, in another article, "Why a Short Sale is Better Than a Foreclosure," I'll describe the massive benefits of a short sale over letting the property go to foreclosure.

[As it turns out, the credit score itself is not necessarily helped by a short sale over any other seriously delinquent account, such as a foreclosure. So the initial score decrease will be the same--experts say a ballpark of 100-200 points on a scale of 300 to 850. And the higher the credit score the greater the fall.]

But the credit report itself looks far better. Most underwriters agree that a short sale looks better than a foreclosure on a credit report. When you're doing a short sale, it shows that you've actually done something about the foreclosure, versus letting it go to foreclosure.

In fact, FHA has developed a loan program just for borrowers who have had a short sale.

There is one way to minimize your credit score reduction when dealing with a short sale. Try to avoid allowing the payments to go behind. That maybe easier said than done, and I know that sounds like an oxymoron--doing a short sale while keeping the payments current, but it can be done.

My students and I do those all the time. The most destructive item to your credit score is the late payments. When it shows 30 days late, then 60, then 90, then 120+ days late, that's when the credit score takes it's biggest hit.

So if you can squeak by and keep the payments from falling 30 days late, you stand to really minimize the damage to your score from a short sale.

How Does a Short Sale Affect a Credit Report?

It is a very hot topic: How does a short sale affects your credit report? Let's have an inside look at what a short sale does to your credit report.

After a short sale transaction is complete, the lender is going to report to the three credit bureaus (Equifax, TransUnion, and Experian) that a short sale was conducted on the loan, as opposed to a full payoff.

Although lenders are subject to change their policies on a moment's notice, we have seen Countrywide report, "settled as agreed," Litton Loan Servicing report "account settled," HFC Beneficial report "settlement in full," and HSBC report, "Account legally paid in full for less than the full balance."

This terminology is very similar to what credit card companies report when a borrower settles an old collection for a percentage of the total amount owed.

In most cases, the short sale approval letter will specify the exact wording the lender is going to report to the bureaus. In isolated cases, you may find where the short sale approval letter does not specify how the short sale will be reported. In such cases, you should contact the department handling the short sale to determine how it is going to be handled.

Also, we have seen some cases where lenders fail to report a short sale to the credit bureaus, for who knows what reason. Maybe they forgot?

And if the account is more than 120 days past due, many times it will automatically show up as a "foreclosure" on the credit report. Therefore, it is imperative that you follow up with all three credit reporting bureaus a month or two after the short sale is complete to verify with all three credit bureaus that a "foreclosure" is not showing up.

In such cases, you may have to provide evidence to Equifax, TransUnion, and Experian to prove that indeed the property was sold prior to a foreclosure.

I hope this helps you understand how a short sale affects a credit score and a credit report. Stay tuned for: "Why a Short Sale is Better Than a Foreclosure.”

For any questions, please comment below. For investment services, leave a message at 314-246-9484 ror you can email at dhibb99@gmail.com

Facts Friday!!!!

If its too good to be true, it probably is!!!!


There's an old real estate scam going around again. New investors who don't know better are being taken in by more experienced investors offering to help them get started investing in real estate.

It goes something like this . . .
"Hey kid, haven't done a deal yet? No problem! Stick with me and I'll not only find you a good one, I'll negotiate it and even get the thing closed for you. You don't have to lift a finger."

Sound good? It does if you're brand-new and don't know any better. It sounds especially good if you're hungry and eager to get your first deal put together.

It gets even more tempting when he says he likes you so much that he'll set it up so you can get into it with nothing out of your pocket. Even better still, he'll massage the numbers so you can walk out of escrow with a check.

Aye Carumba!
Sure enough, the dust settles just like he said it would and not only do you walk out of escrow the proud owner of a new rental property, you collect a check for your troubles.

Hold on, hotshot because that ain't the end of our story . . .

You do this deal and you are now the proud owner of a junker rental property that's been prettied up just enough to sneak it past an appraiser and maybe fool a lender or two.

That new coat of paint, some new cheap carpeting, and a shiny brass door-knocker do not make your property "freshly rehabbed."

It's doubtful that your rental unit is actually ready for a tenant to move into. I'm guessing it's not even close.

More likely, your work is only just beginning because at best, you overpaid for your first investment property by no small margin, and you've got a junker on your hands you can't possibly give away for what you owe, much less rent out to break even.

Soon enough, you'll discover that the $3,000 you walked out of escrow with won't begin to cover the expenses you encounter when you find out all the things you must now do to get the place into rentable shape.

The house sits empty for a couple months while you fix the things you missed or didn't even know mattered.

And it's empty another couple months while you learn that the only people who want to rent a house in that neighborhood couldn't possibly qualify to buy a loaf of bread on credit.

And then you run out of money!

But hold on . . . there's a solution. Your investor buddy calls and offers you another deal just like the first one.

You jump on it because now you need that $3,000 kickback he's once again dangling in front of you.

This is a formula for disaster
Do one deal, and you'll likely get out alive. Do a half dozen of these since your hero investor is really on to something good, and you will soon find yourself in enough trouble that you probably will not get out alive, at least financially.

Instead, you'll be a slumlord with a bunch of garbage properties that are over-financed and are a constant and never-ending pain in the you-know-what.

Hey Newbie! That investor buddy of yours is NOT your friend and doesn't see you as his anything other than a pigeon with a financial statement.

You can bet that as soon as you miss a payment or two on all those over-leveraged junker properties he fixed you up with, that buddy will move on to the next new kid on the block.

Here's the part he's not telling you
That first house you bought, the one he got appraised at $92,000 and sold to you at the bargain basement price of $78,000 (and paid you $3,000 on top of that), did you ever stop and think what he paid for it?

I'm guessing somewhere around $30,000 tops, and he spent maybe another $3,000 or $4,000 prettying the thing up.

The exact numbers don't really matter, but you can be sure the check he walked out of escrow with was a multiple of your check, and in case you haven't noticed . . . you got taken.

Avoid "Red Ribbon Deals," in which someone else does all the work and delivers the transaction to you all wrapped up with a pretty little bow on top.

Rarely is this sort of thing anything more than a con job that'll leave some sucker out of money, out of credit, and out of real estate investing.

This business is all about work
I get paid because I can quickly solve difficult problems for people who desperately need someone to get things fixed in a hurry.

It's not easy, and it's often not particularly pretty, but I wouldn't want it any other way. Difficult problems are good. Hard work is good. It gives me the opportunity to show off my stuff and make things happen.

Forget about easy ways to invest in real estate. Believe me, I've looked, and there just aren't any. And even if there were . . . what would be the fun in that?

For any questions, please comment below. For investment services, leave a message at 314-246-9484 ror you can email at dhibb99@gmail.com

Do it Yourself Thursday!!!

Hey World! Check out my guys from ThinkGlink.com teaching you basic painting!!! Get prepared for your spring painting projects! Do them yourself this year!!!?

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What You Need To Know Wednesday!

Using your IRA account to invest before retirement!!! Make Money Now!!!

Money in an IRA (and other retirement plans) is a great source of real estate investment funds. In fact, most people don't even know they can use their IRA money to invest in real estate, mortgages, and trust deeds. And, once they stash it away, many folks forget they even have money in a retirement account.

You can invest your IRA funds in real estate and mortgages if you have a self-directed fund. And here's the best part: All the profit you make from these investments goes back into your IRA tax free.

Few people know about self-directed IRAs. If you would like to use your retirement funds now for more lucrative real estate or mortgage investments, look for a financial planner who can help you convert to a self-directed plan that permits these investments. The effort is well worth it.

Why let the four to five percent inflation rate cancel out the six or seven percent appreciation rate of your retirement fund? Start making some real money instead. Investing in real estate or mortgages is a wonderful way to skyrocket the growth of your retirement fund. Get started today!

For any questions, please comment below. For investment services, leave a message at 314-246-9484 ror you can email at dhibb99@gmail.com