The REIC Strategy

The last post got my mind spinning so I wanted to share the basics of the REIC strategy. Now, Kris Krohn wrote an entire book on it so I certainly won't be going into that much detail. I highly recommend the book as a source of further information. It's very practical, an easy read that you can download on that site or you get a free hard-cover copy if you go to one of the introductory seminars.

Here are some of the key points to the "Straight Path" strategy:

• Buy at a discount
• Buy least 15% under retail
• Think of a bell curve. Most homes will be priced about right, but there will always be outliers on both sides: some priced too high, some priced too low. The ones priced too low don't stay on the market long. REIC specializes in finding these. 
• Consider how this impacts your risk and tolerance to market volatility!
• Buy at least 3bed/2bath homes under the median home value
• When the RE market tanks, what homes get hit worse, standard family homes or high end homes? Answer: high end homes get crushed! Yes, homes under the median price get hit too, but your standard family homes will not get hit nearly so bad.
• Buy homes that are move-in ready
• I'm not interested in fixing up a place. I don't like manual labor. I also don't want to spend a fortune to fix it up. After closing, it should be darn near ready to show.
• Lease-option exit strategy
• Lease-options sometimes get a bad name because the landlord's goal is to go through as many tenants as possible. Essentially taking advantage of his neighbor. This is not the case here. The goal of this lease option is to get the family owning the home.
• If the family feels ownership of the home, they will take more care of it. A classic line Kris uses is "just don't call me when the toilet breaks." In other words, they take ownership of it. This reduces the amount of time and effort you have to spend maintaining it.
• A lease option implies a down payment to "get in" plus a monthly payment that, if paid on time, will create discounts off the purchase price when they buy. (There is a recommended algorithm for down payment amounts and monthly rent that I will not entreat here.)  The down payment is another boost to minimizing your risk.
• Compassionate Financing (TM by REIC)
• There are so many responsible people who do not qualify for bank loans. Legitimate circumstances may have harmed their credit, they may have recently changed jobs, or any myriad of things. You can help them get into your home and help them qualify for a loan to purchase it.
• When a tenant purchases through your lease option, s/he/they can build more credit in the home than they often can through a conventional bank loan.
• REIC enables you to offer credit repair help for people who need it.
• Helping people get into a home they will purchase is a boon for them. Taking advantage of people is never right; helping them get into a home they can own is a great service.

I hope through these points you saw the 6 pillars well represented.

I don't want to keep jabbering on here, so I'll give you a few links.

• The 5 profit centers explain each place you can make money through this system and shows how even when one or two or three don't cooperate, you'll still be okay. You'll see the 6 pillars represented throughout this.
• You may be wondering by now what it would look like for you if you were to actually consider doing something like this. The 4 phases (yeah, they have all this number stuff set up, but it really is a good way of explaining it) can help you get a good feel for that.

Introduction to REIC

  As an upfront disclaimer, the intent of this post is to be informative; this is not intended to be an outright sales pitch. That said, I am a very happy and enthusiastic client and would unabashedly be pleased to learn of someone becoming a client through my introduction. Would I get a kickback? Yes. Would that motivate me to do this? Not at all. I'm no salesman, and for good reason. Is this some MLM? Not one bit.

  We joined REIC in September of 2010. They are a Real Estate Investment Company. So... who cares? I've always had big financial dreams and have pondered much about how to reach them. REIC has made a significant difference in my financial hopes and shown me how to reach them.

  I hope, here, to concisely paint a broad picture about what REIC is and isn't.

So, here goes. REIC:

• Helps others do, not just learn about, Real Estate (RE) Investing
• They do have training, but that's just the beginning. They do not charge for their training. (Well, there is a one-time fee to join so you could call that the training fee, but it gets you in for life.)
• They make money when you successfully transact (so actually doing) real estate. That is their business model.
• Provides you with a financial and investment coach for the rest of your life
• With your coach you will develop a 10 year financial game plan.
• (I can't begin to tell you how cool I think this part is; I just love it!)
• Your coach will train you initially and be there to help you all along the way thereafter.
• You are encouraged set up appointments to meet with your coach or you can simply call and ask questions as needed.
• Makes RE Investing accessible to the layman. They believe that any RE investment should (they call these the "6 pillars"):
• Take the least amount of time
• Take the least amount of effort
• Have the lowest amount of risk
• Provide service
• Work under any market condition
• Be profitable for the investor
• Strives to set realistic expectations
• I've never heard (from them): "You can not fail if you do what we say"
• I have heard things like:
• "There is risk in doing Real Estate and we don't want you to take on more risk than you're comfortable with"
• "This is how we minimize the risk"
• "Real Estate can be hard"
• "You can expect having some difficult moments as a Real Estate Investor"

What REIC is not:

• A pushy sales group
• They are passionate, but not pushy.
• I remember in my first seminar, Kris Krohn (founder) said something similar to: "Some of you will be excited about this and will want to jump in and we think that's great. Some of you will think this does not make sense for you and that's fine; we will part as friends."
• There was no "you must join tonight if you want to get this price" kind of stuff.
• A couple weeks after that first seminar, we decided we wanted to join. We met with Kris Krohn and, after a while of talk, I finally said: "So.... we're in?". I realized later that he would not invite me. For him, it had to come from me. I had to want it. That is not what I call typical sales. I liked it. I still do.
• A get-rich-quick scheme
• One of the greatest parts for me is the 10 year plan, or your plan to (be able to) retire in 10 years. I don't find 10 years to be "get rich quick".
• It seems to me that get-rich-quick shemes often make it sound easy and effortless. While REIC does try to take as much of the effort out of it as possible, they make no mistake to tell you that doing RE investing has its hard parts.
• An upselling company
• REIC does not try to make a living making sales to its clients. It makes a living when its clients transact real estate.
• This is not to say they do not advise us to make other purchases. That's part of why you get a coach - so you know what you need to do to successfully do Real Estate. (e.g.: We purchased liability insurance when we bought a property. There was no kickback to them on this. It was through our already existing insurance company.)
• An MLM
• When joining an MLM, there is a product or service you are selling. You can also get people "under you" selling that same product or service. Joining REIC, you are a consumer of the service.
• Technically there is a Direct Sales group within REIC that you can join if you wish... if you're a salesman. I don't know much about it. I'm there to be a Real Estate Investor, not a salesman. UPDATE
• The kickback you get for referring a friend is there for all, though much less than what you get if you are actually part of the Direct Sales team.

Well, this is getting pretty long winded. Some things I didn't mention here that I may in a later post (or would be happy to if you wanted to contact me directly):

• What their Real Estate Investment strategy is specifically (some of the "how's" to the "6 pillars" listed above).
• Some concerns I had going in that I think are not uncommon and some experiences that helped resolve them.
• Probably more, but I'm getting tired of thinking about this post for now.

Do you have any questions about REIC you'd like me to answer in another post? Do you have any concerns about REIC you'd like me to address? Not that I will resolve them, but perhaps I can provide some helpful information? Please feel free to let me know directly or in the comments.

EDIT:
I just found this video. It seems to cover a lot of what I just said and it's only 3:18 long. I can't get it to embed or I'd let you watch it right here. Sorry.

Google+ / Chrome Plugin

I like Google products. I think many would consider me a "Google Fanboy". Among other things, I like Google+. I'm always logged into my Google account and don't really like having to log into Facebook too, not to mention Twitter or LinkedIn. (I don't use LinkedIn much, but it is supported.) I just want one place for everything and since Google is already my online headquarters, I'd like to stay there.

Well, progress is being made. Presenting http://sgplus.me/ . (It's free, though there are "upgrade" versions you can pay for.) I'm still exploring this product and its capabilities, but I have been able to post things in G+ and have them auto-post into FB and Twitter too. It's worth using for that feature alone, but of course that's not all it does. I can also import my Twitter and FB feeds so they show up intermixed with G+ posts or just off to the side under Sparks (or both or neither). I can easily comment on a FB post from within G+ or retweet something.

But wait, there's more! I can also mix in RSS feeds with my G+! How cool is that?!  There are still features I've not tried out yet, e.g. I understand there's a way you can import your FB photos into G+, but I'm already very impressed by its simplicity and its feature set. I'll update here as I learn more, but for now +1 to sgplus.me!

Now if only there was a way to auto-post in G+ when I post on my blog. I mean, there is, if people add my blog to their RSS feeds in sgplus.me, but that's not what I'm getting at. I want a native G+ post to be created with a modifiable but default sharing setting (Extended Circles or some such) saying "I posted to my blog. Check it out. <link>"...

The Other Perspective

Many heard on the news about a Denver to Detroit flight on 9/11/11 that was detained upon landing due to some "suspicious activity". The published result was essentially that "nothing came from it". Well, I think this woman may disagree with that sentiment. I think in her life, things certainly "came from it".

Now, after reading this article, I anticipate many reactions. Some would say, using various angles to "prove their point", that this woman did this to herself. Some will likely say she's overreacting. In these cases, I would ask for some honest introspection such as:

• Am I seeking to understand this woman - this fellow human being?
• Is there some underlying political view within me that is potentially feeling threatened? If so, is this inspiring me to judge quickly, thus enabling me to forget about it, thus not requiring myself to honestly analyze my position?
• Are you honestly thinking of her as your equal, bearing in mind every freedom that you enjoy?

It is crucial to be honest with oneself in considering such questions. Without such, all we do is practice self-deception (but this is a topic for another musing).

Another reaction could be to blame the initiator(s): someone (or someone's) reported "suspicious behavior". Any number of light to heavy accusations could surely be leveled their (I'll keep it to a general "their" for ease of writing) way. I would again ask for some honest introspection, such as:

• What kind of weight might have been on their mind?
• Could they have been direct victims of terrorist attacks before?
• Could they have been over-excited by the media about suspicions of terrorism on the anniversary?
• Could they have read the Encyclopedia Brown episode about two people conspiring through using a bathroom at different times (yes, there is such a one) and, seeing the two Indian men (whose nationality they likely had no idea) happenstancially use the lavatory sequentially, suddenly worked themselves up to traumatic terroristic visions such that they could hardly think clearly?
• Could they, if having read the woman's report, feel remorseful about what happened to her?
• Could they have been outright racists, secretly enjoying the pain they knew they were causing?

The fact is, we frankly don't know. We all tend to have good judgment in our own eyes and, as such, it seems likely that they thought they were acting logically. One other question worth asking is, if you observed behavior (regardless of race or anything else - this question is not to be put in the same context as the event that occurred) that you found significantly suspicious, how much would you deliberate internally before actually reporting it? No one wants to look like a fool  (well, excepting perhaps teenagers on occasion :-P ). It may well have been very hard for the person(s) to go forward with turning in the report of "suspicious behavior", yet they did it because they "thought" it was what they should do.

(This post is getting long, so I'll try to shorten it.)

Next, what about the "authorities", as she described them: the police/FBI/Homeland Security personnel? Surely some will want to accuse them of various misdeeds. Well....

• What information were they working from? How much did they know?
• If any one of them realized that this was an injustice, what could they have done differently? Are they "authorized" to make a judgment call in this case?
• Would someone have been risking his/her jobs in acting otherwise, even if "nothing ever came of it"?

So if no one is to blame, perhaps some will blame the "system"? It's easy to blame because it's vague and not easily defined. It can also provide an easy scapegoat to conscience. And while the system may be flawed, what good comes from blaming it? I suggest none. Should it be changed? Perhaps, but to what avail? "The system" didn't participate in racial profiling (which seems to have occurred here, conscious or not). Some will propose the system could be less harsh, but now we enter the hotly contested political question: "Where is the line between 'security enforcement' and 'preservation of liberty'?" *  I don't think you'll see an all-appeasing magic resolution fall from the sky.

* (If you think these are the same, consider taking one or the other to an ultimate extreme. I think you'll find somewhere in the continuum where they cease to be so.)

In the end, was it unfair? Yes. Was she mistreated? Unquestionably. Should we look for someone to blame? I don't think so. I can't imagine any true good coming from it. So what should be done? I don't pretend to know. I applaud her for making her story known. I think it adds good perspective to the conversation that too many don't see (and some try to not see). Hopefully she will be able to handle this not-so-"nothing came from it" episode in a way that does not impede her from living a full life. It may turn out to be easy for her to do, or it may become very difficult. I wish her success.

Purpose and Content

I have created this blog because I often wish to muse "out loud" about things that aren't necessarily appropriate for my family blog. This is my space to do so. I've had many times I've wanted to post to a blog such as this, so now I'm finally creating it.

The content of this blog may contain anything I think of: Religious, Political, Social, Technical, Whimsical, whatever. Sometimes I will post a resolution to some technical problem I was trying to figure out (I work in part as a Software Engineer, see). Sometimes I will link to things that made me think and post my thoughts. And who knows what else. I suspect even I will be surprised.

In full disclosure, I am LDS (a Mormon). I am (in my own mind at least) conservative in my political views but enjoy civil discussions with those who have different views. By "civil" I of course mean respectful, but also crucial is that the intent not be to win a point, but to gain understanding. I believe strongly in the principles advocated by the Arbinger Institute* and hope to ever integrate them into my life.

Regarding comments, they are welcome. I hope they will adhere to my definition of "civil" above. Unfortunately, I make no promise to respond. This is not out of disinterest, disrespect, or because I feel I can not adequately answer. It has everything to do with priorities and the finite nature of my lifespan. I have no desire to let my life get sucked away on it. (Part of why I'm not on FaceBook much: sucked-in-phobia.) Still, I do find it valuable and enjoyable so, if I get to it, I will be happy to respond to comments.

* The Anatomy of Peace, published by the Arbinger Institute. It's an easy read. I could not recommend it more highly.