Bruce’s Wealth Blog

Anyone who has heard me speak live has heard me say that we are not in the real estate business, or the money business.  We are in the people business.  I truly believe that tenet.  Our success is based on the relationships and networks we build.  Our very existence as investors is based on solving the problems others need solved.  On Monday, I had a meeting that was set up by a Pennsylvania Realtor® I had forged a relationship with.  The meeting was with an investor with very deep pockets.  This investor gets about 30 sellers who need short sales every month.  He needed someone to work the short sales so he could buy.  That someone is the Realtor® who set up the meeting with me providing all of the back office support.  This will take our typical short sale load of 90 to 120 short sales on our desk at any given time to between 150 and 180 short sales or more.  Not only will my short sale volume increase, but the investor himself is now a resource I have to help my Inner Circle members.  It is all about the relationships.  If I had not formed a relationship with the Realtor® in the first place, none of the rest would have happened.  The best marketing I have ever done, is the same as the best marketing you will ever do – Network and build relationships.

But now, it is confession time.  As much as I teach, preach, believe, and live the truth that this business is about people, I still find myself regressing back to the money.  I caught myself doing this last week when I welcomed some new Inner Circle members.  As soon as I saw them sign up, I started making a mental calculation in my head.  You know, the one where you start spending money you haven’t even received yet.

Don’t get me wrong.  I do have a personal interest in seeing each and every Inner Circle member find the success they want and to reach the dreams they want to reach.  I am very devoted to them.  But the fact that I made that mental calculation told me something about my heart.  It revealed something to me that I didn’t want to see and am embarrassed to admit.

After the meeting with the new investor client I started picturing what that additional $30K to $45K per month income would look like for my business.  Again, the investor and Realtor® will make more money on these deals than I will, and I will do everything I can for them.  But that mental calculation said something about my heart. 

This is something that we all struggle with whether we want to admit it or not.  We are lured into real estate investing with the promise of big, quick, and relatively easy money.  Some investors get out as quickly as they got in.  But for those of us who stay, we eventually come to understand the truth that this is not about money, it is about people and relationships with those people.  Yet, even with that realization there is still a part of us that reduces those relationships down to a dollar amount.

You may be thinking why this matters if we are doing good things for other people.  If they are better off because of the things we do for them, why does it matter?  If you are better off because of the things I teach you, why does it matter?  It matters because it goes to motivation.

A close investor friend of mine came to me a couple months ago complaining that some of the people he is associated with have not been loyal to him.  I told him that the reason people aren’t being loyal to him is because he has done what most of the rest of us have done.  Even though he was teaching ethics and honesty, he was luring them with the promise of big money.  He was teaching them how to make more money.  He had reduced the relationship he had with his students down to a dollar amount, and then he expected loyalty from them.  The focus was on the cash not the relationship.  Is it any wonder there was no real sense of loyalty there?  The reason why there was no loyalty was because there was no strong basis for a loyal relationship.  It was a result of his own doing, and he is not alone.

I have a student in Texas who was complaining about the Maryland law.  He had no idea how anyone could make money if they could not collect the fee up front.  He was shocked to learn that I had no trouble collecting fees after the services were performed.  The difference?  He was focused on the money.  I was focused on the relationship.

Many national speakers have been teaching (and some still do) to grab the deed.  Create a situation where the homeowner cannot back out of the deal.  This is dangerous, unethical, and downright wrong on so many levels.  But I bring it up for this reason:  The reason investors feel the need to do this is because they are focused on the money, not the relationship.  The truth is that if the seller wants to back out, it is a bad deal.  The other truth is that if there is a relationship established between the seller and the investor, the likelihood that the seller will back out is near zero.

Most students don’t believe me when I tell them that networking is the best marketing they will ever do.  It is too easy and inexpensive for them.  I have built my entire business on these relationships.  Like everyone else I have made really stupid mistakes.  Yet I am still in business.  The only reason I am still in business is because of the relationships I have been able to form with others.  Even though I am good at building these networks and relationships, I will still sometimes make that mental calculation.  That mental calculation harms the relationships I am in and I am working to fix that problem in my heart.

So what about you?  Are you pursuing money or are you pursuing relationships?  Are you looking for loyalty but not building the foundation on which to base and expect that loyalty?  Are you focused on what you get from a transaction, relationship, or other event or are you focused on what you can offer to others?  I am not asking you to answer these questions on a superficial level.  I am asking you to go much deeper.  Most people would say my mental calculation is no big deal.  On the surface, I agree with them.  But when I look deeper, I believe it is a big deal and one worthy of change.  Are you willing to dig deep, see the truth that you may not want to see, and then work for change?  If you do I believe you will reap the rewards.

Take care and happy investing!

Bruce..

I was just about to write a post about the presidential election when I got this email quoted below.  It is a story that is not uncommon and it moved me to change the topic of this post.  Here is the text of the email:

I always felt kinda cheated being from the Phila. area (Ardmore -What they call the Main Line) when ever foreclosure came up it was always about Md.

I was in a coaching program (********* ****** ***** out of Naples Fa.) until I ran out of money.

They had Me sending first a series of 6 Mailings Then 12 Mailings with different messages Each one had a different Ex # to a !-800 #(so I had a 1-800 # with 20 EX) I had a skip tracer they recommended I rented and set up an office the way they told Me to get ready for the on slot I down loaded the list directly from the courthouse every wk.

Started a mail campaign

Used the skip tracer to get their #s

Voice blasted to let them Know an important piece of mail would be arriving And after all that I received 1 phone call to 1 of the educational messages Bruce I still think foreclosures are the greatest I thought Mr Foreclosure Had a great plan(but You are the expert) I have not done a deal of any kind I joined DC Reia for the Education I blew $20k on that coaching program I am broke but willing to work Would You be interested in going into a partnership I (but I don’t know any thing) think in an area like wear I live the average home is 750k to 1mil (I rent on the poor side of town)that the strategies that We heard last Sat. would work Thank You For Your time looking forward to hearing from You

Regards

 

I removed the name of the program because I don’t like to bad mouth my competition and because this story could have come from any one of a number of national speakers and programs that are available today.

Quite honestly before I created the Inner Circle program some of my students probably had similar experiences.  To be truthful, I don’t feel very good about this.  During the time I was teaching high cost boot camps, I was told that if the students didn’t spend the money with me, they would be spending it with someone else.  The sad thing is that it is true. 

I know some people who would go to one conference and spend $20,000.00 there, then go to another one and spend another $35,000.00.  Don’t get me wrong.  Education is important.  But, you need to use the income you get from doing what you are taught in the beginning to fund the rest of your education.

So how do you get ahead?  The first rule is not to go into significant debt learning how to become wealthy.  It makes no sense to me to go broke before you can start building wealth.  I know one speaker who has a two day wealth seminar.  On day one they teach the students how to increase the credit limit on their credit cards.  The second day, they teach the students how to spend that increased limit.  This is just wrong in so many ways.  The fact is that you are starting a new business.  While it is possible to get your first deal done within the first 45 days, it is not the norm.  It takes time to start and grow a business.  It also takes some money.  It doesn’t necessarily take a lot of money but it does take some.  If you spend all of your money learning how to start your business, you then don’t have the money you need to start that business.  As a result, you end up with an expensive education and no place to use it.

The second rule is to start building relationships.  It is through these relationships that you will do the majority of your business. You will need to do some marketing, but the relationships you build will end up being the core of your business.

One of the relationships you will need is a mentor.  You don’t necessarily need one on one mentoring, but you need to plug into someone who is already had success doing what you want to do.  For most people teleclasses, webinars, and forums provide enough personalized education to help them be successful.  While I have done personal one on one mentoring, I think it is more cost effective and just as beneficial for most students to rely on web delivered content, teleclasses, webinars and forums.

Finally, you need to keep focused.  Keep your eye on the ball and never give up.  Most people who try to do something new will quit just before they are about to achieve some success.  Stay focused, be tenacious, don’t listen to anyone who has not achieved the success you want to achieve, put off non-essential purchases, never quit voluntarily, and never spend so much money you have to quit.

You can do it.

Bruce..

I have been getting a lot of emails lately about why I am no longer teaching the high priced courses I used to teach.  They have also been asking if I really expect them to believe that my Inner Circle – Bronze members paying $19.97 per month are actually getting the same high quality content I was giving my $5,000.00 boot camp students.

 

I am going to answer both of those questions right now.  I am going to use this space to open a part of myself to you that I don’t normally open in a business setting.  I will not volunteer this in a strictly business setting again, but will discuss it when asked.

 

The short answer to the second question is, “Yes.”  I am giving the same high quality content to my Inner Circle members.  In fact, they are probably getting better content because it is not static.  The truth is that boot camps are static events.  You go to one, get the material, and they send you on your way with limited follow up if you are lucky.  Most home study courses are the same way.  You pay your money and you are on your own.  Instead using that model, I am constantly adding content and making changes.  In addition, my Inner Circle members are getting more courses.  I am in the process of creating a short sale course, note buying course, and courses that teach various exit strategies.  So, the Inner Circle members are not getting the same value for their money.  Instead, they are getting much greater value.  Not to mention that they would have to be Inner Circle members for more than 20 years to have spent the same amount as my original students who paid $5,000.00 for one boot camp.

 

The answer to the first question is not as easy to explain.  While I believe one’s faith should guide their business practices, I don’t believe they should use it as a calling card.  For that reason, I don’t volunteer it in most business settings.  In fact, the only time in a business setting I do volunteer it is when I am speaking live and invite people to stay later if they want to hear about my relationship with God.  There is too much evil done in the name of religion and faith.  I believe in the principle of the fruit on the tree providing the evidence of what kind of tree it is.  In short, you should be able to tell I am a person of faith based on my deeds.  I should not have to tell you.

 

That said I began my journey with Christ on December 17, 2006.  So far, it has been an incredible journey that has turned my world view upside down.  If you are interested in the details of my journey, you can read my other blog at www.brucesministry.com.  In the late summer / early fall of 2007 I began to look at what I am doing to teach others about real estate investing.  Some students would take the information and run with it while other students would let their peers talk them out of it.  Unfortunately there is no test to see who will work to make it happen and who will not. More and more, I started having trouble with the idea that people would pay me that kind of money and then not be intentional about using the information.  I would discuss it with other national speakers and they would all tell me that it is not my responsibility to make others use the information I teach them.  And they are right, but the Holy Spirit seemed to be taking me in a different direction.  In fact, if you went to the summit, you may have noticed that I did not have the excitement and zeal for promoting my $20K private coaching program that I did providing you with information and doing my talk about God at the end.  Quite honestly, my heart really was not into it. 

 

It was through much prayer, thought, and discussion that I was lead to the business model I am using right now.  I have always thought that it was important for my students to benefit more from the information they get from me than I do from the tuition they pay me.  Now, trusting in Him, I am really putting my money where my mouth is.  He has changed my heart in dramatic ways.  I look at what is being taught to those who are still paying $5,000.00 for courses and I shake my head.  Some of it is good, some of it is mediocre, and some of it will land you in jail.

 

I should have seen it sooner.  My best marketing has always come from networking.  It has always been about building relationships.  Now, I have come full circle.  My eye is on the ball.  It is still about relationships – my relationship with Him, my relationship with my students, and the relationships between my students.  The Inner Circle program is the beginning of a movement where we build relationships – a community where we help each other to get to a place where we can enjoy an abundance of wealth of all kinds so we can do good things for our families, for others, and if we are people of faith, for Him.  On a side note, if you are not a person of faith I will not push anything on you.  It is just what guides me.

 

So those are the answers.  I am not teaching the high priced courses based primarily on where my faith has led me.  And, yes, what I am teaching is at least as high quality as when I was teaching the high priced courses, but I would argue the quality of teaching and the value has increased dramatically.

 

Happy Investing!  This is an exciting time for all of us.

 

Bruce..

The congress just passed a $700,000,000,000,000.00 Wall Street bailout bill.  President Bush signed it immediately after the vote.  Everyone is talking about how the federal government had to step in to bail out a Wall Street that ran amok.  They say it is the result of unrestrained greed on the part of Wall Street and the lenders they funded.  They say we need more government involvement on Wall Street.  Is it true?  Is government the answer or is it part of the problem?

 

In this present crisis, government is not the solution to our problem; government is the problem.   Ronald W. Reagan, January 20, 1981

 

The problem we are facing today actually started during the Carter Administration.  At the beginning of his presidency, President Jimmy Carter signed into law the Federal Community Reinvestment Act of 1977 on October 12, 1977.  This law was designed to encourage lenders to change their lending criteria to meet the needs of the local community, and more specifically the needs of minorities who have a disproportionately low level of home ownership.  In the years that followed lenders faced increasingly more pressure by the federal government to relax lending criteria.  Ultimately this lead to the S&L crisis. 

 

In the 1980s President Reagan signed partial de-regulation of the S&Ls into law.  The hope was that allowing them to invest in riskier loans would offset the losses they were facing as a result of federal government price controls.  In addition, federal regulators allowed the S&Ls to use creative accounting techniques that did not conform to Generally Accepted Accounting Principles (GAAP).  One of these techniques was something called goodwill.  If the S&L had $10 Billion in assets but had liabilities of $12 Billion, the $2 Billion dollar deficit was pushed down as goodwill and then counted as capital to hide S&L’s insolvency.

 

The end result of these actions pushed the inevitable S&L meltdown back to the end of the eighties  instead of them melting down in the beginning of the eighties.  As a result of the S&L meltdown, the Resolution Trust Corporation (RTC) was created in 1989.  Between 1989 and 1995 the RTC liquidated $394 Billion in assets.  The RTC created partnerships with private companies to liquidate these assets.  The investors who ultimately bought them made fortunes almost overnight.

 

The dust from the S&L had not even settled when the Federal Reserve Board wrote a scathing report about lending in Boston, MA.  In {Closing The Gap:} the Federal Reserve Bank of Boston, with regard to underwriting criteria said, “Even the most determined lending institution will have difficulty cultivating business from minority customers if its underwriting standards contain arbitrary or unreasonable measures of creditworthiness.”  The truth is that the underwriting standards were not at all arbitrary.  Underwriting standards come from statistical examinations of thousands of performing and non performing loans.  It is a risk analysis calculation that does not even look at whether the applicant is a minority or not.  The S&L crisis hadn’t taught them anything.

 

Then, in response to increasing pressure from the Clinton Administration, Fannie Mae finally agreed to relax credit requirements in 1999.  Again, this was an attempt to increase home ownership among minorities.  The changes worked.  In the early 2000s we saw more minority homeowners than ever before.  I have personally seen $600,000 homes in Northern Virginia sold to minorities who worked in low paying jobs such as landscaping and fast food.

 

Warning:  Sarcasm Zone

Wait a minute.  Landscaping and fast food jobs usually pay around $20,000 to $35,000.00 per year.  That works out to about $1,600.00 to $3,000.00 per month gross.  That doesn’t count withholding and other payroll deductions.  The last time I looked a $600,000.00 mortgage at 6% for 30 years is more than $3,500.00 per month.  If we amortize over 40 years it is still $3,300.00 per month.  I wonder why that would be a problem for people grossing less than $3,000.00 per year?  I wonder why the default rate is so high?

End of Sarcasm Zone

 

While greed did play a role on Wall Street, it is the federal government who pushed and pushed and pushed the lenders to relax their lending criteria.  So now $700,000,000,000.00 of taxpayer money has been set aside for another bailout.  Nearly two times the amount of the S&L meltdown.  Reagan was right.  Government is the problem.  Government interference will be costly for taxpayers.  But, government interference will also make investors who are smart enough to take advantage of the situation very wealthy.  Those who have specialized knowledge in foreclosures and the foreclosure process will be the big winners in the next 18 to 24 months.

 

Those of you who are reading this right now are finally in the right place at the right time.

 

Bruce..

 

P. S.  If you are looking to acquire the skills you need to take advantage of this situation make sure you join “Dr. Preforeclosure’s” Inner Circle at http://member.drpreforeclosure.com