When the ball is in the rough, you have to change your thinking on the next shot. You have to recognize that the grass is higher here than on the fairway; that a tree limb is smack dab in your line of sight to the flag; that you are standing on the side of a hill, which means you need to change your stance.
When things go wrong, you have to adjust from your normal course of action. You have to think about where you are, not where you wanted to be. And there will be a ripple effect from all the changes you are making.
There will be times when your business is in the rough. Maybe the inventory you have doesn’t match the orders you are getting. Maybe the delivery date doesn’t fit your schedule. When this happens, slow down your thinking. Plan a few options to get back to the fairway. Weigh those options. Imagine each outcome. Do not exacerbate the situation with another bad shot or another bad decision.
I got the from the book Hermaisms by John Herman Jr
mitdino Uncategorized
I know I bring this up a lot, but I just want to reiterate something. Cash flow is all that maters when looking a an income stream weather it is buying a operating business or a piece of real estate. It is only worth a multiple of its cash flow. I think the biggest single mistake investors make when it comes analyzing cash flows is that they underestimate expenses. Be very realistic when you predict future expenses. If you are buying a business make sure you include in your expenses a dollar amount for the amount of work you put into the business. To many people assume that it is going to take no work to run. I do not care what kind of business it is or even if someone else is running it. All business need some work on the part of the owner. The time you spend on your business needs to be an expense to the business. I read some place that the owner of a business should always pay him self first not last. Most business owners, take out of the business at the end of the month with what is left over. I propose that at the beginning of the month you pay your self your salary, that way you know that if by the end of the month there is a cash flow problem, you need to change something
mitdino Uncategorized
I have been talking to a lot of bankers lately and to borrow money you basically have to not need it. The Banks have really gotten tight you can no longer just rely on the bank you have always used you have to look at several different sources for financing to get financing. Although I think there underwriting is more sound that it has ever been. I do think they are over reacting somewhat. What is really interesting is to see the wide range of mythologies banks used to under write the same deal.
mitdino Uncategorized
I just got back from the lake house. The house is 7 years old now and it is reaching the age where everything breaks. The sprinkler system in the yard took a huge beating over the winter and there the siding needed washed since it is ok a lake it take a toll from the weather that you do not see in the city. Lisa’s dad did most of the work. But all told we spend 10 hours each working on the house. EACH I think we would be better of renting a condo and spending time doing something that we enjoy or get paid for. Better yet I think that time would be better spent on an income producing property. We are all betting that our homes appreciate at a rate greater than the interest rate we are paying. Plus the real estate taxes we are paying. Anyway, if you read this and are wandering what kind of real estate you should buy first,. the first thing you should buy is an income producing property that has a nice cash flow
mitdino Uncategorized
Thank goodness for Lisa, she is so great about doing the yard work. I have lived in my house for almost 10 years and I have only mowed the yard twice. She only asks for my help when she just cannot get to it I hate doing anything around the house, there are a thousand things I would rather be doing. And I think working around the house is a complete waste of time and money. I might live in a bad example but overall I still do not think in most cases your primary residence is not a good investment. Many people say that you should always own you home. I have always fought this. In fact my first apartment after college was all bills paid and I cleaned the hallways for 3 apartment complexes for my landlord making my rent less than what the real estate taxes and utilities would have cost in owning a house. I lived here for several years before he had a cousin clean the hallways making the deal less attractive.
If I did not have to worry about moving all the junk that we have accumulated for 10 years my vote would be to rent a small one bedroom apartment in Midtown crossings and keep the lake house.
The MIT CRE had a recent article written about it in the WSJ about this subject. Here it is
http://online.wsj.com/article/SB124352291846962809.html
mitdino Uncategorized
It has been confirmed banks are basically locked down unless your deal meets the following criteria
1. 30% equity off of appraisals or what you paid which ever is lower
2. Your historical NOI is in excess of 1.25 of your mortgage payment
3. You live in the city where the property is at
4. You have less than 8 houses as investment property
5. You have a job that is tied to the real estate
6. Most importantly. You do not need the money.
I say this last comment to be funny, but I have not seen a lending environment for 18 years.
On the good side. The rental market is going to get really good, since people cannot easily borrow money
mitdino Uncategorized
