Last night I was flipping through the channels when I came across a classic movie, 1984's 'The Karate Kid'.
As I was watching Ralph Macchio's character 'Daniel LaRusso' get his butt kicked time & time again, I couldn't help but think of how this great movie relates to everyday life, in particular the life of an entrepreneur.
LaRusso starts out the film moving to a new town (from NJ to southern CA) - I liken this to when a newly minted college graduate steps out into the 'real world'. It's scary, unnerving, and frankly a giant ocean of unknowns. All you really know is what you THINK you know, which amounts to hours upon hours of homework and book-worming. Unfortunately, very little of this highly expensive time actually relates to real life (of course it's different if you're a doctor or a lawyer, but this blog is about business and entrepreneurship)... I'll stop this particular metaphor here, because I could devote an entire novel to the subject... so I'll spare you.. ;-)
So, LaRusso is in a brand new world/environment. He soon realizes that he aspires for more... He has his eyes on a young, attractive blonde at his high school. This can be related to an entrepreneur's motivation(s) for starting a business. This could be money, recognition, or just simply aspiring for more than what the corporate grind has to offer.
But, there is a problem of course.
LaRusso is the 'new kid on the block' (que cheesy '80's music now), & the young blonde has other admirers, in particular the school bully and his group of teenage minions. This can be seen as the many obstacles that an entrepreneur faces as he/she goes out to conquer & achieve whatever motivates them.
This revelation doesn't stop LaRusso. He seems to ask himself, 'Why can't I have the girl? After all, she seems to like me!' Every entrepreneur has to make the tough decision to go out on their own despite the naysayers.
So, LaRusso goes on his conquest & proceeds to get his butt-kicked on a regular basis. However, soon a foreign maintenance man named Mr. Myagi takes notice. Mr. Myagi takes LaRusso under his wing & teaches him discipline & the skills it will take to achieve his goals. This can be seen as the mentor, or the job that leads to the eventual opportunity for success. After all, no one ever truly achieves success solely on their own, even highly recognizable entrepreneurs today.
As many of you already know, LaRusso goes on to win the local Karate Championship, & beats his bully in the finals. By doing this he gains recognition, & most of all the girl he so desires. This is the reason we become entrepreneurs. We all aspire for more. We realize there will be many obstacles, but we choose to persevere.
'The Karate Kid' teaches us a valuable life lesson -- That in order to achieve the success one desires, one must gain the skills and knowledge necessary, & then continue to keep getting up again & again, eventually achieving one's goals.
I like to end my blogs with a quote, so here you go:
'I've missed more than 9,000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over again in my life. And that is why I succeed.' - Michael Jordan
Till next time ~
Rocky Moore
Owner, ROMO Group, LLC
Thursday, November 14, 2013
Thursday, October 31, 2013
Window Closing - A good thing.
Today's blog is an opinion-based piece primarily based on company field trials and observations.
The window is closing.
The metaphoric window aforementioned is in reference to investor opportunity in the residential 'flip' market.
Rather recently, ROMO Group and it's realtor partners have noticed a significant decline in available deals that fit the residential 'flip' model. In other words, the amount of distressed residential properties have become so insignificant, that it's no longer a viable opportunity for serious real estate investors and deal making entrepreneurs. This occurrence had already been felt in larger urban areas and on the country's coasts. But now, the tide has washed it's way into the hardest hit areas of the recession.
Is this a bad thing?
Absolutely not. This means that the country is finally rounding the turn into economic growth and stabilization. It means that less homeowners are underwater on their mortgages, and property prices are on the rise for the long-term. It means that more businesses will be looking to expand, thus hiring more employees.
Real estate is very much a cyclical business. In it's simplest terms, you buy when it's low and you sell when it's high. Timing can be a tricky thing - as seen in the last market fiasco.
However, there will be a frothing period at the top of this newly forming bubble (selling period), followed by a steep decline in real estate value and economic prosperity (buying period). If you look at history, I believe you could reasonably anticipate this cycle to run for 10-15 years. If the past is the greatest indicator of the future, real estate explosion and implosion seems to run in 10-15 year increments (i.e. the late 1970's, the late 1980's, and the mid-2000's). In other words, I believe that we are in store for a 10-15 year economic climb. This is great for everyone.
In order to prosper in business and in life, one must adapt to their surroundings. I am now seeking opportunities in commercial real estate development and retail planning, while continuing to build our rental portfolio. I think this strategic move will only benefit myself, my family and ultimately ROMO Group in the future.
It's really just a game, isn't it? Making money is a game - how well you do depends on how well you play it.
I'll end this write up with a quote: "The definition of insanity is doing the same thing over and over and expecting different results" - Einstein
Till next time ~
Rocky Moore
The window is closing.
The metaphoric window aforementioned is in reference to investor opportunity in the residential 'flip' market.
Rather recently, ROMO Group and it's realtor partners have noticed a significant decline in available deals that fit the residential 'flip' model. In other words, the amount of distressed residential properties have become so insignificant, that it's no longer a viable opportunity for serious real estate investors and deal making entrepreneurs. This occurrence had already been felt in larger urban areas and on the country's coasts. But now, the tide has washed it's way into the hardest hit areas of the recession.
Is this a bad thing?
Absolutely not. This means that the country is finally rounding the turn into economic growth and stabilization. It means that less homeowners are underwater on their mortgages, and property prices are on the rise for the long-term. It means that more businesses will be looking to expand, thus hiring more employees.
Real estate is very much a cyclical business. In it's simplest terms, you buy when it's low and you sell when it's high. Timing can be a tricky thing - as seen in the last market fiasco.
However, there will be a frothing period at the top of this newly forming bubble (selling period), followed by a steep decline in real estate value and economic prosperity (buying period). If you look at history, I believe you could reasonably anticipate this cycle to run for 10-15 years. If the past is the greatest indicator of the future, real estate explosion and implosion seems to run in 10-15 year increments (i.e. the late 1970's, the late 1980's, and the mid-2000's). In other words, I believe that we are in store for a 10-15 year economic climb. This is great for everyone.
In order to prosper in business and in life, one must adapt to their surroundings. I am now seeking opportunities in commercial real estate development and retail planning, while continuing to build our rental portfolio. I think this strategic move will only benefit myself, my family and ultimately ROMO Group in the future.
It's really just a game, isn't it? Making money is a game - how well you do depends on how well you play it.
I'll end this write up with a quote: "The definition of insanity is doing the same thing over and over and expecting different results" - Einstein
Till next time ~
Rocky Moore
Monday, September 30, 2013
How to 'force' equity back into real estate...
I'm going to devote this blog to briefly discussing how to make $$ on a 'flip'.
By definition, a 'house flip' denotes buying a property at a certain price & then reselling, or 'flipping' it to a retail buyer at a premium price (profit)... So, just how do you do that exactly?
Well, this may seem a little strange to some, but you actually make money in real estate when you BUY a property. That's right, the key to 'flipping' properties is not selling as much as it is BUYING. If you don't quite understand this concept, please keep reading...
Have you ever heard the saying, "You should want to buy the worst house on the best street"..? Well, this statement reigns true in the world of 'flipping'. In order to calculate leveraged risk on a property acquisition for profit, you must be able to identify a property that can be acquired at a discounted price of .50 to.60 cents on the dollar (or less=more profit), then you have to assume (actually calculate) rehab costs.... The rehabilitation costs of the property should not exceed .10 to .15 cents on the dollar... Therefore, you should only consider cosmetic to advanced cosmetic rehabilitations, & be weary of any structural or mechanical issues. ------> This is how you 'force' equity back into real estate. By using this formula correctly, you should reasonably expect to make a gross profit of .25 to .30 cents on the dollar, or 25-30% on a 'flip' sale.
^ This is the formula I use.
Here's the secret.... You can pretty much guarantee a certain return (profit) by doing thorough research & due diligence. Therefore, RESEARCH & DUE DILIGENCE are crucially important to a real estate investor. I'm talking about doing a full-fledged CMA (Comparative Market Analysis), running the demographics, looking at neighborhood trends, researching nearby schools/facilities/businesses, the full gamut.
But, by far the most important piece of real estate research, as it pertains to 'flipping', is the CMA. You must know the recent nearby sales prices of similar properties (must have similar floor plan, be no more than 1-2 miles away from subject property, & a sale that happened less than 3 months ago).... This will mostly determine what you can expect to sale (flip) your property for. <---- (VERY IMPORTANT)
So, to wrap this brief tutorial up, if after doing all my research & due diligence, I find a property that is discounted (distressed) by 40-50% because of an unfortunate situation that's not adversely effecting the nearby property values, I can expect to 'force' equity back into the home by making certain improvements to the property. But REMEMBER, this can only be determined through in-depth research & due diligence of the subject property, & most importantly the surrounding areas' recent similar sales.
* As a side note --- In the future I will attach a link or file that will go to an excel spreadsheet breakdown of one of our 'flips'. This should give you an in-depth look at what I mean by 'cosmetic' rehab, and the actual tasks that 'force' equity back into properties.
Until next time ~ Take care, & happy house hunting!
Feel free to leave any thoughts/questions/comments, & I will try to respond in a timely manner.
Rocky Moore
Member/Operating Manager
ROMO Group, LLC
Monday, September 9, 2013
Intuition vs. Logic (in life, & in business)
Although this blog was setup to primarily reflect upon the real estate business, from time-to-time I'd also like to write about tools that can transcend across any business situation (or life).
That being said, I had a discussion today about the power of a person's intuition, a.k.a 'gut feeling'. I argued that intuitive feelings are far more powerful than logic. In fact, I believe that logic is preceded by intuition, & not the reverse.
I argued this because intuition, or a person's 'gut feeling', is a culmination of all their life experiences, mistakes, & lessons picked up over the years. To put it in a metaphor, the inward persuasion is likened to a super-computer combing through files & data, then uploading the information in order to sway you one way or another.
To relate it to real estate; If I'm trying to determine whether or not a particular property is a great investment & will be profitable, 9 times out of 10 I will draw my conclusion based upon my initial intuitive feeling. Of course, I will use every tool available to further warrant that feeling. And, as you might assume, the evidence rendered through comparative market analysis, field studies, neighborhood demographics, etc. will 90% of the time validate that intuitive feeling.
To look at it from the opposite angle, if I ever find myself trying to 'logically' override an intuitive feeling, I'll immediately know that it is the wrong decision. Now, I'm not saying that the intuitive feeling is the most appropriate decision, or for that matter a decision at all.... but simply that there must be a better alternative that's not yet been discovered.
I'd love to know your "feelings" on this subject. Do you feel that intuition is a more powerful tool than logic? If so, to what extent? Or perhaps you don't put much emphasis on intuition at all... ?
Thanks to all, & please remember to 'like' us on our Facebook page (ROMO Group, LLC).
Type again soon,
Rocky Moore
Member/Operating Manager
ROMO Group, LLC
That being said, I had a discussion today about the power of a person's intuition, a.k.a 'gut feeling'. I argued that intuitive feelings are far more powerful than logic. In fact, I believe that logic is preceded by intuition, & not the reverse.
I argued this because intuition, or a person's 'gut feeling', is a culmination of all their life experiences, mistakes, & lessons picked up over the years. To put it in a metaphor, the inward persuasion is likened to a super-computer combing through files & data, then uploading the information in order to sway you one way or another.
To relate it to real estate; If I'm trying to determine whether or not a particular property is a great investment & will be profitable, 9 times out of 10 I will draw my conclusion based upon my initial intuitive feeling. Of course, I will use every tool available to further warrant that feeling. And, as you might assume, the evidence rendered through comparative market analysis, field studies, neighborhood demographics, etc. will 90% of the time validate that intuitive feeling.
To look at it from the opposite angle, if I ever find myself trying to 'logically' override an intuitive feeling, I'll immediately know that it is the wrong decision. Now, I'm not saying that the intuitive feeling is the most appropriate decision, or for that matter a decision at all.... but simply that there must be a better alternative that's not yet been discovered.
I'd love to know your "feelings" on this subject. Do you feel that intuition is a more powerful tool than logic? If so, to what extent? Or perhaps you don't put much emphasis on intuition at all... ?
Thanks to all, & please remember to 'like' us on our Facebook page (ROMO Group, LLC).
Type again soon,
Rocky Moore
Member/Operating Manager
ROMO Group, LLC
Wednesday, September 4, 2013
INTO THE WILDERNESS ---- (a dissection of an entreprenuer's modus operandi)
I hope the title doesn't sound too over-the-top cheesy... but as a first-time blogger, I hope that maybe you'll cut me some slack..... ;)
As you can see, I've decided to venture into the blogging world. Not for an egocentric conquest of narcissistic self-gratification, but rather to share some of my insight(s) as I continue through the wild west world of the entrepreneurial real estate business.
My hope is that this blog will one day become a reliable, informative, thought-provoking source for local real estate investors, developers, agents and enthusiasts alike. I would like to think of it as a "think tank" for local greater Atlanta real estate professionals.
That being said, I would like to devote this first blog to giving you some background information on my company, and why I decided to venture into this rough and tumble business:
I founded ROMO Group, LLC in May of this year (2013).
As many of you are probably aware, the national real estate market is currently in a rather unique situation.
From roughly 2008 to earlier this year, all new home construction virtually came to a screeching halt. Even now, new home construction is far off the pace of pre-recession numbers. During the recession (which I'll note as being between the years of 2008 to 2013) the housing bubble collapsed leaving many homeowners underwater on their mortgages and not seeing any other alternative than foreclosure. This unfortunate situation flooded the market with vastly discounted bank-owned properties that literally could by bought for pennies on the dollar... and investors quickly took notice. Not only did local small business investors get in on the action, but Wall Street did as well. Large institutional investors started gobbling up massive amounts of bank-owned homes and adding them to their hedge fund portfolios. The Street's strategy seemed simple enough (renovate them, then rent them out.... and hold for several years until the market improved and resell them for a substantial profit)..... If only we knew how much we could learn from playing 'Monopoly'.
But wait a minute.... could it be that things are starting to improve for the homeowners? Why yes, yes it could. In fact, just today I heard a statistic that home prices are .12% higher than one year ago, and only .20% off their all-time-high pre-recession numbers. Now, many homeowners are seeing their investments rise above the surface, bringing them out from underwater on their home loans. This is great news.
Many first-time home buyers, and the folks that have been paying inflated rental payments are now beginning to once again desire the great American promise of home ownership. However, there is a problem. You'll recall that new home construction has been virtually nonexistent since 2008, and is only seeming to trickle back at a snail's pace. This has created the unique situation I mentioned to you above. Remember the old demand & supply lesson in grade school economics? Well, it's just that simple. The demand for great homes is significantly higher than the available supply, and it's once again a seller's market.
I believe we have a window of opportunity greater than any other time in history to exploit this 'perfect storm' in the market, which was the catalyst behind my decision to found ROMO Group. At this point, we and our investors' strategy is primarily 'flipping' properties, thereby revitalizing once great properties suffering from the after-shock of the Great Recession, and turning them into the best & desirable homes.
So, now that you have an idea of what we do and where I'm coming from, I hope that you will engage on our Facebook page and social media outlets to give your thoughts, knowledge and opinions on the market. Again, my hope is to share my experiences and findings, and also hear some of yours so that hopefully this will become a 'think tank' for local greater Atlanta real estate.
Type again soon.
Rocky Moore
Member/Operating Manager
ROMO Group, LLC
As you can see, I've decided to venture into the blogging world. Not for an egocentric conquest of narcissistic self-gratification, but rather to share some of my insight(s) as I continue through the wild west world of the entrepreneurial real estate business.
My hope is that this blog will one day become a reliable, informative, thought-provoking source for local real estate investors, developers, agents and enthusiasts alike. I would like to think of it as a "think tank" for local greater Atlanta real estate professionals.
That being said, I would like to devote this first blog to giving you some background information on my company, and why I decided to venture into this rough and tumble business:
I founded ROMO Group, LLC in May of this year (2013).
As many of you are probably aware, the national real estate market is currently in a rather unique situation.
From roughly 2008 to earlier this year, all new home construction virtually came to a screeching halt. Even now, new home construction is far off the pace of pre-recession numbers. During the recession (which I'll note as being between the years of 2008 to 2013) the housing bubble collapsed leaving many homeowners underwater on their mortgages and not seeing any other alternative than foreclosure. This unfortunate situation flooded the market with vastly discounted bank-owned properties that literally could by bought for pennies on the dollar... and investors quickly took notice. Not only did local small business investors get in on the action, but Wall Street did as well. Large institutional investors started gobbling up massive amounts of bank-owned homes and adding them to their hedge fund portfolios. The Street's strategy seemed simple enough (renovate them, then rent them out.... and hold for several years until the market improved and resell them for a substantial profit)..... If only we knew how much we could learn from playing 'Monopoly'.
But wait a minute.... could it be that things are starting to improve for the homeowners? Why yes, yes it could. In fact, just today I heard a statistic that home prices are .12% higher than one year ago, and only .20% off their all-time-high pre-recession numbers. Now, many homeowners are seeing their investments rise above the surface, bringing them out from underwater on their home loans. This is great news.
Many first-time home buyers, and the folks that have been paying inflated rental payments are now beginning to once again desire the great American promise of home ownership. However, there is a problem. You'll recall that new home construction has been virtually nonexistent since 2008, and is only seeming to trickle back at a snail's pace. This has created the unique situation I mentioned to you above. Remember the old demand & supply lesson in grade school economics? Well, it's just that simple. The demand for great homes is significantly higher than the available supply, and it's once again a seller's market.
I believe we have a window of opportunity greater than any other time in history to exploit this 'perfect storm' in the market, which was the catalyst behind my decision to found ROMO Group. At this point, we and our investors' strategy is primarily 'flipping' properties, thereby revitalizing once great properties suffering from the after-shock of the Great Recession, and turning them into the best & desirable homes.
So, now that you have an idea of what we do and where I'm coming from, I hope that you will engage on our Facebook page and social media outlets to give your thoughts, knowledge and opinions on the market. Again, my hope is to share my experiences and findings, and also hear some of yours so that hopefully this will become a 'think tank' for local greater Atlanta real estate.
Type again soon.
Rocky Moore
Member/Operating Manager
ROMO Group, LLC
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