What`s Your Underlying Reason For Investing?

[housingrental]

Thanks Joe

Can you elaborate - such as who is Eben Pagen / what are his credentials, education etc.. / why should people care about his 3 tier model on money?



[quote user=JoeRagona]Sorry about that Adam, there are many ways of just looking at how we "see" money. Harv Ecker talks a lot about this, Stephen Covey, Peter Drucker etc, but Eben Pagen is where I learned this analogy of the psychology of money.

 

[housingrental]

Thanks Michael for your thoughts



Would anybody else like to provide their opinion on this?





[quote user=bizaro86][quote user=housingrental]It seems like there's a gaping whole in legislation in that space that should be filled



Any thoughts on why the limited consumer protection / barriers to government implementation?




How would the gov't judge who is actually competent? That's the biggest problem, IMO.



A real estate investment properly managed by a competent asset/property manager would be a good thing for a lot of people. If JV type deals were restricted by legislation, or subjected to securities type disclosures, that avenue of investment would close down for those who would benefit from it. That makes the economy less efficient.



I actually think the best plan is for education by groups like REIN and the media for both ends of the deal. If everybody knew what questions to ask someone pitching a deal, this wouldn't be a problem. (How long have you been doing this, what is your track record of success in all stages of the real estate cycle, etc)



If potential "real estate experts" were warned to be able to show that before they tried to raise money that would be good as well.



After all, increasing regulation in this space would be bad for REIN and many REIN members, so it's in their best interest to not attract negative attention to it, which is what happens when stories about somebody stealing from their grandma does.



Regards,



Michael

 

[housingrental]

Thanks for your detailed thoughts Thomas.

For ease of readability I've copied a portion of your post into this one and responded beside it.



There's plenty government regulation is the securities space, which is
the next step after JVs, i.e. JVs with the public. Too much regulation
one could argue. But what about JV's in particular?



Perhaps each blog post here at myreinspace should go to a government panel first, for approval ? Or jokes only ? Perhaps "joke" blog posts should not be made targeting certain ethnic communities... and regulation should be in place through REIN stating this and enforced by REIN. Would a system like that help to provide the most benefit to the most amount of people?



Each abuser needs an abusee. Are you really blaming the victims of abuse as an example of why someone buying into a JV is at fault for losses and government regulation is not desirable or I'm I not reading this correctly? Really?????







[quote user=ThomasBeyer][quote user=housingrental]Any thoughts on why the limited consumer protection / barriers to government implementation?


There's plenty government regulation is the securities space, which is the next step after JVs, i.e. JVs with the public. Too much regulation one could argue.



There's bike helmet laws [why: allow me to break my own neck]. Seat belt
laws [why: just up the insurance 10 fold and it'll self regulate]. Fire
codes [pretty anal in many instance]. Rules for property managers or
realtors.



Laws, rules, by-laws, regulations by 3 levels of governments, court rulings, reference cases .. we do not have enough rules ?



One reason for Europe's & US downfall, btw: too much government !



I'd argue that governments in many instances over-regulate. Regulations costs. Costs and benefits have to be weighed !



Perhaps each blog post here at myreinspace should go to a government panel first, for approval ? Or jokes only ?



Each abuser needs an abusee. Do your proper due diligence on house, partner
and contract and 80% of fraud would disappear. Fraud will continue to
happen. Sometimes just bad luck or financial crises or incompetence. It
is hard to regulate incompetence.



Use common sense.



Related post on real estate syndications common sense due diligence: http://myreinspace.com/search/public_forums/General_Discussion/61-22331-110625-8_Mistakes_to_avoid_in_real_estate_syndications.html#110625





Common sense is not so common.

 

[Thomas Beyer]

Just like the "occupy" movement it is always easy to state a problem. This world has many problems. It is far more difficult to propose solutions. So specifically, how would you reasonably regulate JVs between 2 willing parties besides better education, better disclosure, better due diligence and better legal agreements ? Due diligence includes review by a third party or more disclosure, at the option of the investor. < br>
< br>

Investors often do very little due diligence and rely too much on sales brochures or sales pitches by clever sales people. Hence, I call it the "abusee". If they asked more questions or were better educated, many of the "abusers" like the mutual fund industry, or overpowering sales people or crooked investment schemes would disappear. Without an abusee, an abuser can't exist. They come in pairs. < br>

< br>
If you offer me a JV for X $s, what regulations, if any, do you propose are necessary or prudent ? Review by the JV section of the RCMP ? Review by a lawyer ? A 3rd lawyer ? A fourth ? Review by The Ministry of JVs in Canada ? Paid by whom ? Willing adults should be allowed to interact as they feel, within the law.

 

[AndreiAngelkovski]

Excellent Post Thomas! I agree 100%.

 

[housingrental]

How about as a start:



Review by your own lawyer prior to JV as requirement - lawyer needs to sign off to make valid



All parties are required to put in a minimum amount of $ in some portion to size of stake in project to ensure investor and expert interests are aligned.



What do you think Thomas?



[quote user=ThomasBeyer]Just like the "occupy" movement it is always easy to state a problem. This world has many problems. It is far more difficult to propose solutions. So specifically, how would you reasonably regulate JVs between 2 willing parties besides better education, better disclosure, better due diligence and better legal agreements ? Due diligence includes review by a third party or more disclosure, at the option of the investor.
Investors often do very little due diligence and rely too much on sales brochures or sales pitches by clever sales people. Hence, I call it the "abusee". If they asked more questions or were better educated, many of the "abusers" like the mutual fund industry, or overpowering sales people or crooked investment schemes would disappear. Without an abusee, an abuser can't exist. They come in pairs.
If you offer me a JV for X $s, what regulations, if any, do you propose are necessary or prudent ? Review by the JV section of the RCMP ? Review by a lawyer ? A 3rd lawyer ? A fourth ? Review by The Ministry of JVs in Canada ? Paid by whom ? Willing adults should be allowed to interact as they feel, within the law.

 

[housingrental]

Hi Andrei - and anyone else who'd care to respond



So lets say you go to a bakery and purchase a loaf of bread.



Lets say the baker includes a harmful and addictive substance in the bread without informing customers. This results in you purchasing from the baker far more than you rationally would otherwise if aware of the true nature of the product being provided.



Under this scenario a few questions for you to answer:



Would you as a consumer of the bread be happy with this situation?



Would you prefer to have had full disclosure as to nature of the product and risks associated with purchase?



Would you consider the baker's actions ethical?



Do you think there is a role of the state to regulate the actions of the baker to ensure the safety of consumers?















[quote user=AndreiAngelkovski] Excellent Post Thomas! I agree 100%.

 

[Thomas Beyer]

I think it is a good idea, but NOT a requirement. People should have the right to arrange their business affairs as they see fit. Alignment can be created even if one party has no money invested.



If someone does a JV with you, and screws up and loses half your money, and loses her/his reputation and worked for free for 3 years, who loses more ?



We usually always invest money into our JVs to increase investor comfort ! [However as asked by Adam, it should not be a legal requirement in my opinion, but is a good indicator for the investor]

 

[Rickson9]

Losing half >> than 3 short years. That was easy.

 

[2ndstory]

I invest in real estate because it is a challenge, allows me to participate in capitalism, and will hopefully help me afford some extra luxuries for myself and my family.



1. Challenge: I have always been one to take on challenges. I know lots of people who talk about doing things but never do. They are afraid of the risk, their wives are afraid of the risk, they are afraid of their wives, or they love television too much to get off the couch.



I hate sitting on the sidelines. I used to love to go watch bands play. So I learned guitar and started a band. Toured and recorded. I used to love watching stockcar races. So I partnered up with someone, built a car, and raced it. The same drive got me started in real estate.



2. Capitalism: I work for essentially a socialist organization called the public education system. I love teaching, but schools are bubbles shielded from real life. Did you ever wonder why blue collar workers have little respect for teachers? They think teachers don't understand real life and how the world works. Often they are right. I get to be a part of the "real world" with my real estate investing. I also get to bring what I learn in the real world back to the classroom. Suddenly the Math lesson on compound interest, taxes, or a balance sheet takes on real meaning.



3. Luxury: My teaching career affords me a comfortable living. It alone will never make me rich, but if the pension is still there when I retire, I should be able to live quite comfortably if I don't assume a lot of personal debt. People often get into teaching with that in mind. They know that society will always need teachers, the unions are strong, and the pension (although we pay lots into it) is good.



The finite security of a teaching career is attractive to some but at the same time confining to me. Real estate allows me to dream of a future that is only limited and determined financially by my moves and choices. For me it presents greater possibilities.



Level 1, 2, or 3? I don't know. I've always made it a habit to give 10% of my earnings to charity or my church. I will strive to continue whether I make millions or not. If I am faced with the question of what to do with a surplus of money once debts are paid, I will decide what to do at that point.



Nik

 

[JoeRagona]

Hi Adam,



Just Google him - I follow, study and absorb a lot of information from a lot of great people - Eben is one of the worlds' leading online marketing people. When you are in the world of business, outside of Real Estate, there are so many people to learn from - he is one -



Everyone values mentors differently, and I absorb so much information from all of them mainly because I'm so addicted to learning - there is always something I can pick up and pass on to others.

 

[TangoWhiskey]

Going back to the start of this thread, the reason is freedom. Lots of people have died over the centuries to give me the chance at getting and keeping the wealth I work for. Ultimately wealth gives you the freedom to do and (try to) be anything you wish. Not going for wealth and being conscious of it is a life where you turned away from risk and accepted that you had turned away from whatever change that that risk will ultimately entail for better or worse. For some people failure to go for wealth is really just laziness and/or cowardice at the prospect of all that hard work.

If coaches help people get wealthy and they might not have otherwise, some folks just need support. I suspect most entrepreneurs don't and in fact I'd be really curious to see any stats on the end performance of investors who have done costly RE mentorship or courses or coaching vs the performance of investors who haven't gotten all the training. I plan to pursue both models of investing to figure out which is better. There's arguments for both.

Anyone who is debating these questions in the first place probably doesn't need a coach.

 

[Thomas Beyer]

[quote user=TangoWhiskey] I suspect most entrepreneurs don't and in fact I'd be really curious to see any stats on the end performance of investors who have done costly RE mentorship or courses or coaching vs the performance of investors who haven't gotten all the training.


I suspect most entrepreneurs DO (need mentorship or help or training or have received it at one point or another in their career)



It just looks different for each person. I have used at least 6 or 7 mentors over the last 15 years .. some formal and some not so formal .. and continue to use them !



You might be married to one ..

 

[JoeRagona]

I agree Thomas...I thought because I have been a lifetime entrepreneur, fairly successful (from the streets) that I did not need anyone's help. My world changed when my attitude changed.



Every successful person, atheletes etc have coaches (who would Tiger Woods be if it were not for his coach) The simple reason is because we cannot look at ourselves to asses what is really needed to get to our full potential - we THINK we can, but really, if you look at how far THAT has brought you, you know there is much more to pursue.



using the athelete as an analogy, they KNOW they are the best TODAY, but continue to work on tomorrow - this is what a coach does for them. Can they get there on their own? Maybe, probably, but they choose to let another guide them because they are not tied to the outcome, they are not in the spotlight.



Personally, I continue, like Russell has mentioned many times, to pay tens of thousands for personal develpment in my business and life.



Everyone will choose differently and obviously grow at different paces depending on how 'independent' they are.



I talking from experience.



This entire thread when through many ideas and it's not about 'coaching' even though Andrei interviewed me about it - what we touched on was the original idea of how Mike (my partner) and I drill down to figure out WHY someone is really investing and then design a blueprint that helps them go after that reason pushing aside all the distractions and shiny objects most people, investors and entrepreneurs have trouble ignoring. That's all.

 

[TangoWhiskey]

On the subject of mentors helping you build a portfolio, I am personally only interested in those who have already done what I am setting out to do, or directly helped others do it. Since my goal is to create a portfolio of several hundred units, there is enormous value in getting the input of someone like Thomas who is really one of this forums biggest assets, or perhaps from a really experienced private equity guy who's done a bunch of syndications. I would be happy to pay a lot for this oversight. However, I personally find no value in hearing from someone who has not created this type of portfolio.



Earlier someone asked the questions of capital lost vs years of time of the RE expert. Having been both money and operating partners in different JV structures I notice a bias away from the money in favour of the RE experts time. The reality is that that money was paid for by someone's time at some point, and if it is lost then it was the money partner's time not the RE experts time. So personally I don't buy the whole time is irreplaceable argument as to why the operating partner should get whatever percentage. The real match is between the capital of the investing partner and the opportunity for higher returns brought by the RE partner. It is not about the time of either.

 

[JoeRagona]

At least you have a direction of where you want to go and what you are looking for to get there!



Just to make it clear, Mike and I do not help people 'build their portfolio' per se ... that's what REIN is for, we are not replacements ... we are doing what most people want to do - and that is simply invest in real estate full time with a focus on building foundational wealth while living a balanced life without the chaos of adding another 'job'.



How we help is with the acceleration of that process by elminating most of the guess-work along the way and nudging them to actually make decisions.



You would be surprised at how many people sit around waiting for the perfect time and on the other hand, go out and buy like crazy only to be caught a few years in ...

 

[2ndstory]

[quote user=JoeRagona] only to be caught a few years in ...






?



Nik

 

[TangoWhiskey]

[quote user=ThomasBeyer][quote user=TangoWhiskey] I suspect most entrepreneurs don't and in fact I'd be really curious to see any stats on the end performance of investors who have done costly RE mentorship or courses or coaching vs the performance of investors who haven't gotten all the training.


I suspect most entrepreneurs DO (need mentorship or help or training or have received it at one point or another in their career)



It just looks different for each person. I have used at least 6 or 7 mentors over the last 15 years .. some formal and some not so formal .. and continue to use them !



You might be married to one ..


Thomas, when you say you have formally used mentors - that is to say you paid/pay for their oversight and guidance etc?



I'm trying to decide whether to pay for David Lindahl's coaching in pursuing multi-family in the US. I find great value in the REIN forum and he has a similar set-up for his coaching students in addition to the coaches and various other forms of concrete support. My major goal in getting his coaching would be access to networking forums for raising US capital as supposedly many of the people in his programs are former grads who've made money and are now looking for easier returns through operating partners. This may not be the best avenue to raise capital and it does go against the general theme of JV capital raising through family etc first. People in the education business needs to sell the value of their offering and I'm curious if you found good value for mentorship you paid for.

 

[KevinMatwichuk]

Here is my reason for originally investing in real estate.



One Life - Live It!



I wanted to spend some dedicated time with my family! Seven months trapped on a boat with your family. I dare you all to give it a try. Awesome experience an a great goal to get you through the tough days of investing!

 

[Thomas Beyer]

[quote user=TangoWhiskey]Thomas, when you say you have formally used mentors - that is to say you paid/pay for their oversight and guidance etc?


yes



The value is hard to see immediately .. it might be 3 months in, 3 years or 3 decades !



One never knows where one meeting with one individual goes. Some advice is trivial, and some is life changing.



US capital raising: be very careful with (potentially) very litigious US capital partners. Build relationships first, then ask for money later. David Lindahl: tell me about it as I was considering it too.



In any JV: the right to ask for money needs to be built on a solid foundation of knowledge AND experience in the chose asset space, in my (humble) opinion !