I was reading the Sunday Wall Street Journal page in my local paper, the Sacramento Bee. I read an article about the stock market and dollar cost averaging vs lump sum investing.

I was stunned to learn the return on investment one would have earned since the first of the year had one invested in the Standard & Poor’s 500-stock index.

If an investor had invested 100K on the first trading day of the new year, by the close of the market on August 5, he would have increased his investment by 2.2%

If he had dollar cost averaged – which is defined as investing a set amount each month over a set period of time – he would have done slightly better and earned 2.3%.

Am I missing something? 2.3%? 2.3 freaking percent!! Two thousand three hundred dollars over a period of seven full months. This is an acceptable return? For the possibility of losing the entire investment; with no securitization, no fail-safe, no “guarantee”? And  this is an acceptable return?

Let’s compare my experience in real estate with my private lenders

(These examples are for illustration and NOT A SOLICITATION TO INVEST)

In a real estate investment with me the investment is secured by a trust deed against the property. Usually it is a first trust deed. Whether it’s a first or a second will typically relate to the amount of money invested relative to the cost of the project.

If a person is more risk averse he or she will often choose a straight interest investment. I have paid 3 points and 12% interest. If the investor is willing to take a higher risk, and by that I mean participate in the profits for a reduced interest return, then I’ve paid 2 points and 7% with a 25% share of net profits. For those that are gung ho I’ve taken equity partners where the investor puts up the funds and I get the job done and we share profits 50/50. And the great thing is that virtually every deal I do has the same three opportunities.

A concrete example: I recently had a project in Auburn (you can see it on my YouTube channel, http://youtube.com/jefffreyallendouglas, it’s titled “Gold Country Flipping).

The first investor wanted a fixed return on investment so he chose a simple interest investment. The rehab funds investor chose a profit participation. On a 28K investment they earned over $11,000!

That is not an unusual occurrence in real estate. Working with the right people there is opportunity for mom and pop investors to earn a substantial return. And unlike stocks, if the deal goes bad, the security, the property, doesn’t disappear.

So why are so many people in the stock market making a piddling return with what  I would consider a higher risk? Perhaps it has something to do with the amount of advertising done to convince the small investor that the market is the only place to be?

Of course all investing has risks, but the fact is that more millionaires are created in real estate than any other investment strategy.

Let me ask you this: You’re not making money with me in real estate because…………….?

What is it you love doing about what you are doing? What is it you are trying to achieve? Why? How long are you willing to wait, to work, to persevere, to get to where you’re going?

Do you ask yourself these questions on a regular basis? Are the answers easy to remember? Have the answers changed over time?

I’m a very visual person and so I process in images. I use analogies and and metaphors to explain things because that’s the way I understand. I have to “see” to understand, or believe. Now the “seeing” doesn’t always have to be literal; my faith allows me to “see”.

But to use one of my favorite mental images for keeping on keeping on, let me tell you about walking to Miami. Now from where I sit here in Rocklin, California, Miami is south by southwest, I’d guess about 3000 miles away.

So, if I start walking, riding, or driving in a south by southwest direction, asking for directions, correcting my course as I go, even if I take detours, as long as I keep moving in that direction, adjusting my course, I will eventually get there.

The key is to never quit. Never give up. What if I take a detour for a few years? Miami will still be there when I resume my trek.

The point is for me to keep moving in the direction of my dreams. The pace is my pace. I decide. Fast or slow; nonstop or lots of detours. It isn’t up to anyone but me unless I let it be.

Now as you’re on the journey to your Miami, ask yourself the questions posed at the beginning. That’s part of making course corrections and it will help strengthen you for the long road.

But here’s a secret: it’s okay to change your mind about the destination; you may discover paradise before you get to paradise.

I flip houses. As of this minute, I have 6 rehabs working, I have 3 properties listed for sale and another one in escrow. This is what I do and what I have exclusively done since 2006 after spending 35 years building houses. I am good at what I do and I like doing it.

I’ve been reading blogs and articles and postings and ezines on flipping houses for awhile now, seeing what other investors are doing and teaching.

If I was just starting out and the source of my knowledge and direction was to come from what is generally available online, I would soon crash and burn. The huge majority of what is online is either garbage, fluff, or so incomplete as to be useless. There is also the everpresent sales pitch for the program that will make you rich. And you barely have to do anything!

Here’s the truth: It is work. Smart work. Sometimes hard work. Sometimes frustrating work. But it is work. Flipping properties especially at first is work. the people that tell you otherwise just want you to give them your money.

Now compared to the world I used to live in, (see http://www.jdconnections.com) it is a lot easier work, but still, it’s work.

Now that we understand that part, the next issue is that you MUST get educated. Not the cheezy, half-baked courses you see online; a college level, working adult oriented, taught by actual practioners, educational system. It won’t be free or even cheap but you are much more likely to fail if you do not first get educated. 

You see, there is always tuition involved. You can pay upfront and plan for it, budget for it, fit it in to your goal planning OR you can pay at the School of Hard Knocks. At the SHK you don’t know when the tuition bill is due. You don’t know how big it is going to be. The SHK has flunked out many a would be investor.

For educational info see me at http://www.jdconnections.com and yes, that is a sales pitch. The difference is that I’m telling you exactly how I learned, where I learned, who taught me, what I learned, and I even post my actual, yes, I answer it, cell phone number! And that leads to the next item.

If you want to learn how to make money in real estate it cannot be over emphasized that you must find a mentor, a coach. Someone in your area doing what it is you want to do, doing it a lot, making money doing it, and most importantly, doing it TODAY. You also have to be able to talk to him in the flesh, and see his projects. You need to be able to go to the properties before, during, and after. He needs to have a track record, a number of properties you can check on. Also, check the tax records to make sure he owns it, or did own it. You can access public information to see what it sold for as a flip.

Now if you’re lucky enough to be in the greater Sacramento area then you want to talk to me. If you’re serious about it, contact me.

Flipping properties is a blast and there is great money to made doing it. I am convinced that the market we are in now is a once in a lifetime opportunity to create massive wealth through real estate investing. Are you next?

I was interviewed today by a copywriter to help me get “me” on my new web home. We talked for about 40 minutes. When we were done I felt like I was high. Seriously, it was a blast. As I thought about why, I discovered that I LOVE what I do. I love talking to people, I love networking, I love looking for deals, I love analyzing deals, I am absolutely thrilled when I hear, “we got it.” I love working with the designer, the workers, the agents, the private lenders, the title agents, everyone.  And you know what, closing the sale isn’t the best part, the process is the best part. The sale close of escrow is almost anticlimactic. Don’t get me wrong, getting paid is great, but for me it’s not THE thing.

So what does being passionate have to do with real estate investing? I think everything. If you don’t love the process you’ll communicate that. People respond to and want to be around positive energy, so if you are that person, things “will just happen”. Deals will just appear. Doors will open. It will get easy. People will want to work with you, they’ll want to help you.

But here’s the catch: it’s real or it’s not. It isn’t a skill you can learn and develop, that’s called manipulation. But you can develop a love for the process as you learn to live a life of love.

Yes, it’s true. Live a life of love and everything you do will be changed.  You see, there is so much more to investing than the numbers. You absolutely can’t be successful as an investor if you don’t know the numbers, but you won’t be wildly successful until you LOVE what you do.

There was a time when I LOVED framing houses. And I was very, very good at it. I was good because I loved it, not the other way around.  For that part of the story see http://www.bluecollarlifechanger.com

But now I LOVE doing real estate deals. If you want to work with someone who has a passion for the whole process and what you’re trying to learn and LOVES to share it, contact me. 

Remember, change the way you look at things and the things you look at change.

It is widely known that real estate is one of the best ways to generate wealth. Quick profits, cash flow, appreciation, depreciation, tax deductions,  all are part of the allure of investing in real estate.

So why do I say it isn’t for everyone? Let me say first that I think everyone SHOULD own real estate as an investment. But from my experience over the last few years not everyone can or should be a real estate investor.

I’ve seen many people leave jobs for the “time freedom” that comes from being an entrepreneur. But what happens is that because there is no more “boss”, no one looking over the shoulder, no threat of getting fired for non performance, they stop working. There seems to be a belief that work is over, that a couple hours a day will create wealth. Nothing could be further from the truth. It takes a lot of effort, a willingness to spend the time to be educated, to do research, to network, to put in the hours, to pay the price as it were, for the the new “time freedom”.

Freedom comes at a cost and a lot of folks aren’t willing to pay. There is no sick pay, no vacation pay, no “I don’t feel like doing anything today, I’m sure glad I get paid for just being here” if you are an entrepreneur in real estate investing. The employee mentality must be shed!

In the next post we’ll continue to look at thinking errors that lead to failure as an investor as well as some things I’ve learned that have helped me have some success.

If you are interested in being mentored by a workingman real estate investor check out http://www.bluecollarlifechanger.com

What would you do if you received a phone call telling you that the just installed-yes, installed- carpet in your rehab project had been stolen?

If you are rehabbing, remodeling, restoring, or in any way improving a property there is a chance you’ll be robbed or vandalized. In fact, in some neighborhoods it is likely that you’ll be buying and installing some things twice.

So how do you prepare? Big dogs on the property? Alarm systems? Temporary fencing?

I’ve never used the dogs. I’ve thought about getting big, mean, barkless dogs. Barkless so they could deliver a message, if you get my drift.

Unfortunately, getting robbed or vandalized is a cost of doing business. I do use alarms and and temporary fencing but itstill happens. For a look at one instance go to http://www.youtube.com/jeffreyallendouglas

I think the most important thing is to be prepared. Do NOT assume that it probably won’t happen. Secure the property. Use lights. Use locks. Use alarms. Offer the neighbors money for keeping an eye on things. What I often do is just give the neighbors $20 per week in advance for keeping watch.

And most important, don’t ever leave tools or items to be installed in a clearly visible space in the house.

If you’d like more real life lessons from an active real estate investor, contact me on this page or go to http://www.bluecollarlifechanger.com

I realize it is hard to start over. Doing a new thing for the first time can be so intimidating that it can actually seem safer to stay put than to strike out on the new path. I say “seem safer” because it is really not safe at all.

Look at it this way; if what you have been doing for years is just not working anymore, then how can it be “safer” to just slowly slide toward ruin?

You’ve heard the story of the frog in the hot water, right? If the water is slowly heated, the frog will stay put; until it is too late to escape. 

I think that’s the way a lot of my blue collar brothers are behaving. It’s obvious that the blue collar middle class has taken a beating. And it is not going to get better any time soon, if ever.  But, it is so scary to change, to learn to use new tools, that a lot of guys are just staying in the pot of rapidly heating water.

Well, as someone who spent 35 years building houses, and most of that time as a framer, I can attest to the fact that it is possible to completely change direction, to get out of the dang pot. It’s just a matter of learning how to use different tools. 

So what are the tools?  Where do you find them? Who will teach you to use them? How much do they cost? If you’d really like to know then click on the link below. http://www.bluecollarlifechanger.com

I’ve thought about this for awhile; when am I blessed? Is it when life is rolling smoothly? When all is good in my world? When I am enjoying the harvest of my labor?

Or could it be that the blessing is planted in the darkest times, in the really difficult, soul tearing, emotionally wrenching agonies of failed relationships, job losses, foreclosures and all the other painful roads we must walk?

When a vineyard is planted, how long does it take from first planting to first bottling? Years, right? But what must be done in the meantime? Work! Lots of work.

Tilling the soil, weeding, feeding, tending, protecting the new growth. That is the choice that must be made in order to enjoy the harvest.

So it is with all we do; be it creating wealth, or nurturing a relationship or even working at a hobby. The hard work must be done first.

So then, what if you are really struggling right now? What if there are lots of weeds that are choking your new plantings? What if there are insects devouring? What if there are unknown diseases sapping the vitality of the new endeavor?

Perhaps my friend you are being blessed. If, and only if, you perservere. If you quit you will never enjoy the harvest.

Maybe the struggle is the blessing. The wine comes far after the blessing of the grapes. Embrace your struggle! Be grateful for the difficult path! Someone has great confidence in you. Humbly accept the blessing of the trial, this could be exactly what you’ve been waiting for.