Category Archives: Personal Real Estate Opinions

I’ve had the best winter I’ve ever had as a real estate agent.  Money in reserves the whole way through.  But sometimes both as a self-employed real estate agent and as a real estate investor there have been months that were longer than the money I had on hand. 

And for most people this will happen at least once in their careers.  But what to do if it happens to you?

Don’t Panic – Curtail Spending
As you know, your credit score is vitally important to your economic health.  Protect it at all costs by making sure all bills are paid on time.  If you know you are going to fall short (and 99% of the time you will) you can begin to make spending adjustments right away.  Peanut butter and jelly sandwiches instead of Wendy’s.  One more year with an older car and no car payment.

Build Savings When Times Are Good
We’ve heard it a million times.  Have 3-6 months of reserves.  For many people, that may never actually happen.  Or they may not think it will happen.  I like what Dave Ramsey says on the issue.  “Get $1,000 in savings as quickly as possible.”  A lot of unexpected surprises can be dealt with when you have an extra $1,000. 

Take The Extra 29 Days
As we all know you have to make your payments on time to keep from getting a late hit on your credit report.  Do you know what “on  time” actually means?  Your creditors will not report you late until you are 30 days past your payment date.  Therefore, you can make your March 1, 2008 house payment on March 29, 2008 and still be reported as paying “on time”.  That extra time will allow you to get the money together, most of the time.

But remember, once you go down this path you are essentially going to have to make two payments in April to make up for the one you “skipped” in March.  Do not use this technique to go on a trip or to buy a new car.  This is for emergency purposes only!

Now the creditor’s bill collectors will tell you otherwise.  They will call and threaten and rant and rave.  I just tell them that I have until midnight of the 29th and they’ll collect extra interest…now leave me alone. 

Skip Utilities Payment
Like your creditors you utilities will always give you and extra month to pay.  They won’t advertise this.  But you can just not pay one month and keep carrying that forward until you do have the money to pay.

Work Part-Time
Of course, the best way to not get behind is to stay ahead.  Many a winter time when I was getting started I would work part-time in a camera store.  A ding on the pride, yes.  Exhausting, definitely.  But not having any late payments and enough money to buy presents at Christmas made it worth it.  Don’t be afraid, especially in this economy, if you have to do some extra work to make ends meet.

Somehow our culture has turned around the pride of working into a form of shame.  “Did you hear about Bob?  He had to take a part-time job at Target?”  When what should be said is “Wow, did you know Bob was working part-time at Target?  That guy will do whatever it takes to support his family.”

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There were no great new tips here.  Just guerrilla tactics designed to give you enough time to get to the point where you have more money than month.  Of course, the best way to avoid all this is to live on less than you make.  Save the first 10%, and all that.   But until you get to that point, I thought you might like to know about this issue. 

Anyone who has bought or sold a house in the last ten years has seen the Disclosure forms that are attached to most real estate contracts today.  Even states where it is not required to have these Real Estate Disclosure Addendums have them as a routine practice. 

What Is A Disclosure Form?

Every real estate board probably has a little different version.  But in the broadest scope a Disclosure Addendum is designed for the Seller of a property to “disclose” anything they know about a property that a potential home Buyer would want to know.  Some example items would be;

• Has the house had termites?
• Is the house in a blasting zone?
• Does the house have a chronic sewer line back-up problem?
• Is the house haunted?

Each of those examples given, amongst literally hundreds and hundreds more, are items any potential Buyer would want to know.  And laugh if you will on the last one.  But I read about a case where the courts ruled the Sellers should have notified the Buyers that they thought the house was haunted. 

How Does This Pertain To Real Estate Investing?

Investment property Sellers here in the Kansas City area are notorious for putting on their Disclosures “Owner Never Occupied” and little else.  They just figure that will get them off any responsibility that comes down the line.

Well neither I, nor the states of Kansas and Missouri, believe that to be true.  As a real property owner you still have knowledge of expenses incurred.  You know that a basement is a problem or not.  Your tenants have told you the sewers back up, or the roof leaks in heavy rains, or that there is a foul smell that comes from the attic in the hottest parts of the summer. 

Do You Feel Lucky?  Well, Do You?  Punk!

Disclose what you know…or should have known.  I would venture to say that most lawsuits stem from an initial failure to fully disclose known issues with a house.  You ignore it and figure that by the time Mr. Home Buyer figures it out you’ll have your proceeds and be on down the road.  But when the sewer starts backing up and the plumber comes out and says it looks like the main line is shot and that he had given an estimate on it about 6 months ago…or Joe the busy-body neighbor says “Oh, yeah.  They always had plumbers over for that.”  Well, you are going to have issues.  Trust me.

Problems leave a paper trail.  You will be found out sooner or later.  If there is a problem not only must you disclose, you should.  It’s the right thing to do.  Deal with it up front, without the attorney fees.  It’ll save you a lot of money in the end. 

And if I know about it, or any other real estate agent for that matter, I must disclose whether you do or not.  It’s the law.  It’s my license.  It’s the right thing to do.

Real estate investing takes a little bit of risk.  But why do we take that risk?  Because we are seeking security. 

I thought of this last night at 2:54 am when my three year old came running down the hallway crying.  She entered our room and jumped up on the bed and crawled in between her mom and I.  Seems she had a bad dream that there were spiders in her room and they were “getting” her.  (Hey, she’s three.) 

So she risked getting out of the safety of her covers to run down the hall where she knew she would be secure.  Secure between her mom and dad she knew nothing would dare touch her there.  Every parent knows what I’m talking about.

Do we ever really grow up?

One of the most common situations I face as a real estate investment adviser is when a husband and wife come in to meet for the first time.  One or the other will not be 100% on board.  And usually the more willing of the participants is looking to me to help convince the spouse.

Sorry, I don’t do marriage counseling.  🙂

But I am more than willing to layout the risk versus reward factors.  Is the risk and the additional work you are taking on worth the security you are seeking?  Security for a Retirement Worth Having.  Only the couple, together, can answer that. 

There are ways, of course, to minimize the risks you take when buying your first income property.  Find a real estate agent that understands residential real estate investing.  Understand the numbers of a neighborhood.  (Vacancy rates, rental rates, turn-around times, appreciation rates, etc.) Understand the numbers of the financing choices available.  Understand entry and exit strategies.  Have ready cash reserves. 

Sooner or later everyone needs to decide what they are going to do about their financial future.  I commend the the 20-33 year olds who are already moving on their future.  But in fairness, that’s a group more ready to embrace risk.  It’s the 35-50’s that have earned something, have assets in play and are deciding on whether to risk those assets or not that I’m talking to here. 

Evaluate the risk.  And decide it it’s worth the security you will have later down the road if all goes well. 

Last night while flipping through the channels with a touch of insomnia I came across this dude claiming he had a book that would help you wipe out all of your debt without bankruptcy or any additional payments.  One claim is he can give you two magic words that will drastically reduce or eliminate your credit card balances.

Another was a secret he has that without spending any additional money you could turn your 30 year mortgage into a 10 year mortgage.  And he is willing to share these secrets with you for only $29.95. 

Question: Can he give me the words that will allow me to pay only $4.95 for his book? 

The funny thing, hilarious actually, was the women’s panel (The View?) he was discussing these subjects with.  One was a Playboy Playmate at some point and they pointed this out like it was a strength.  Besides taking her clothes off for men to stare at (which, I’m not necessarily against!) I am not sure of her qualifications for discussing financial strategies. 

Question: If you created all this debt isn’t there at least some sense of moral obligation for you to pay (at the very least) the principal back?

Maybe I’m doing this blog wrong.  I become more convinced everyday that I should start spinning real estate investing into some sexy 3-step formula (devoid of any truth or facts or real life scenarios) and sell these ideas for $19.95.  There have to be enough desperate and gullible people out there to get me a Mercedes.  Don’t you think? 

Editor’s note:  The above is only my opinion and should not be considered libel towards Kevin Trudeau or his book Debt Cures.  I’m sure they offer great reliable honest truthful sound advice that will work every time.  This was strictly a review of my opinions from watching the infomercial. 

Dear Attorneys & Possible Plaintiffs, 

This is an open letter to all of our great nation’s attorneys and possible plaintiffs to not sue me for $25,000,000 as you are doing with a fellow real estate blogger in Florida.  (Read about it here in the Miami Herald.)  Within this blog you will find both statements of fact and those of opinion.  Sometimes even I’m not sure which is which.  🙂 

It is important for you to know that I use this blog to communicate my ideas, principles and real estate investment theories to my clients, customers and casual readers.  I’m usually right.  But there may be times when your opinion differs from mine. 

So here’s what I would rather you do…simply write a rebuttal.  Tell me I’m wrong.  So long as the argument is rational and polite I’ll listen.  Heck, I’ll even publish it.  But enough of the screaming “I’ll Sue!”

Of course, I also realize that people are always looking for a buck.  And they might think I have it.  Well, enjoy trying to find it.  My wife has been looking for years!  Let me know what you find because it’s quite possible VISA would also like to know. 

Anyway, you know where to find me.  But please, please, please just leave me alone!

Best regards,

Chris Lengquist

p.s.  I also had nothing to do with you over-paying for your home.