By M. Jane Garvey

How many times have you thought to yourself, that guy is so lucky. He doesn’t seem to know anything, but things keep falling in place for him. At the same time there may be people in your life who have everything going for them, but don’t seem very successful. Why is this?

Occasionally we attribute success to the amount of focused action people take. Goals, a plan to achieve them and action directed at the process. This is certainly one way to improve your odds of success. It is rare that people succeed with out trying. It is also hard to define success if you don’t decide in advance what that means for you. But focused action doesn’t seem to explain the luck.

More likely it can be explained by the concept “It is not what you know, but who you know.” If you are “connected” you may have the guidance needed to avoid the false starts, the wrong turns, and the dumb mistakes that others make. This hardly seems fair. The playing field isn’t level. Massive action by a connected person can be much more fruitful than massive action by someone going it alone.

The good news is – you too can be connected.  It is not just for those who inherit great wealth, are married to a tradesman, have a brother who is the building inspector, grew up in a family of landlords, etc. The best connections you can have are people with knowledge or experience, people who have been down the road you are traveling. You can develop the connections you need. Keep in mind that your need for connection may change during different phases of your investing journey.

Real estate investors associations (commonly known as REIAs) provide fertile ground for planting seeds and harvesting connections. Within an association you will find others that are doing what you want to do. It is likely that they have identified the tools and resources you will need.  Some of them have other connections you will need. You may have connections they need.

Make friends. Speak up about how things are going on your journey. Let people know what you are missing and what connections you need. Be open and genuine in your approach. We all like to help people when and where we can, but we can’t help if we don’t know you have a problem. It is very important to try to help others when you can as well. Connections are at least a 2-way street.

Interestingly enough, people who are handed connections as a birthright may have a hard time developing the skills needed to make new connections. They may seem privileged, and life may initially seem easy, but some of these people really struggle as their needs change.

You are in charge of your own journey. It will be different. You will define your success or failure. The knowledge and resources you need will be different as well. Even with this in mind, learning from others’ successes and mistakes can accelerate your progress. Take advantage of the resources, education, and networking that your real estate investors association provides. You are only one connection away, and chances are high that connection is right in front of you.

Jane Garvey is President of the Chicago Creative Investors Association.

By M. Jane Garvey

In a society where instant gratification is the norm, it may be tough to think about long-term planning and the benefits of delayed gratification. But as investors that is precisely what we should be doing. Taking the time to consider the consequences will almost always benefit us in the long run.

Myopic behavior – or short-sightedness – often drives people to make impulsive decisions or to take unnecessary risks. To avoid such behavior, you must learn to consider the long-term implications of your actions.

One of the most common examples of myopic behavior is the housing provider deciding to rent to a marginally qualified renter. Vacancies are financially painful. So, to avoid the short-term pain of paying the bills without the income from rent, the housing provider makes the gamble to rent to someone that has a high probability of failure. The short-term benefit of no vacancy may lead to the longer-term cost and pain of an eviction and all the loss and damage that comes with it. Experienced housing providers will always tell you to wait for the well qualified applicant. The quick fix rarely is the right choice.

Buying an inferior part or tool because it is cheaper is another example of myopic behavior. If the plumbing part breaks, when will it have to be replaced? What is the cost to have it replaced, and even worse, what is the cost to repair the damage caused by the failure? These costs need to be considered in your decision. Cheaper is not always cheaper in the long run.

Ignoring small “leaks” in your cash flow is a big mistake. Let’s say you are spending $100 per month more than you could be on your insurance. If you made the needed change to the insurance and invested that newfound cash flow savings at 10% interest, over the course of the next 10 years you would have $20,484.50. If instead you invested it over 30 years you would have $226,048.79.  The myopic behavior of not finding the time to fix the “leak” can be very costly long term.

Survival in the real estate business involves avoiding unforced errors. Ignoring market conditions is one such error. Ignoring governmental imperatives is another. Violating the precautionary advice of long-term investors is yet another. You will need to think long term and be willing to adapt your strategies to survive long term.

We have seen investors who seemed to be very successfully rehabbing and reselling property while interest rates were low and buyers were competing for properties. In order to find deals to bring to market, some of these investors started making decisions that were only viable in ideal market conditions. They shrunk their profit margins, started counting on market appreciation, bought houses in undesirable locations, or with undesirable floor plans, cut corners on the rehabs to save money, and other similar things. These myopic behaviors eventually lead to trouble when the market shifts.

In some areas of the country the rental property business is under attack. Housing providers are being asked to take risks on potential residents who have a high risk of not being able to meet their obligations under the lease terms. Rents are being regulated via rent control and other measures. Taxes and regulatory expenses are increasing, shrinking profitability. There is myopic behavior in these instances by government as well as the investors that choose to continue their operations in these areas. Legislation that discourages investment may bring a short-term benefit to the current residents, but in the long run housing shortages will hurt everyone. Investors who choose to stay in an area where their business is under attack are like the ostrich with its head buried in the sand. Trouble is upon them, and they are either blissfully unaware, or think that if they can’t see it, it can’t see them. This myopic behavior can be disastrous.

In the excitement of learning about investing, cautionary advice from long-time investors can seem discouraging. Some newbies don’t want to hear it or see it – like the ostrich with its head in the sand. This advice can give you a long-term perspective and will dramatically increase your chances of long-term survival in this business. Navigating the waters of market shifts is best done with some guidance. Join your local investor association and spend some time getting to know the long-time investors. Their wisdom will help you make wiser decisions that do consider the long-term effects.

Learning about alternative strategies that can help you adapt to changes in the market is another thing that myopic thinkers ignore. The time to learn is before you need them. Making sure you have back-up plans for your investments is important. Real estate is not as liquid as many other investments, so we need to know how to adapt, and be able to shift our strategy when things aren’t working. Many office, mall, and other commercial properties have major vacancy issues right now. In some areas short term rentals are under legislative attack. The investors who have alternative use plans have a better chance of surviving these shifts.

Diversification is another important part of long-term survival. A variety of investments in a variety of property types in a variety of locations will lessen the risks. You should still take the time to regularly look at the continued viability of your holdings and the markets they are in. This approach will allow you to make the shifts needed when problems are on the horizon.

Think Long-Term, Act Long-Term, Survive Long-Term and Profit Long-Term

Jane Garvey is President of the Chicago Creative Investors Association.

By M. Jane Garvey

Attitude can make or break you. We all have times in our lives where it is tempting to doubt ourselves and our abilities. Many of us also fall into the trap of externalizing control. It may be tempting to think we are a victim when people do something, intentional or not, that harms us.  When others, or even circumstances, force a change to our routine our immediate reaction is sometimes to feel angry or put upon. No matter what is happening, you have the choice of your attitude. You have the ability to do better.

As Henry Ford said “Whether you think you can, or think you can’t – you’re right.”  This quote has stood the test of time. Attitude is of the utmost importance in doing our best. We need to believe in ourselves and our abilities and avoid the limitations created by self-doubt.

We can take this process of adjusting our attitude to another level when we examine our feelings about the difficult things we are facing or have faced in our lives. Looking for the benefits and the opportunities in everything will be eye-opening if you have never tried it. This process can take you to new heights.

When something you perceive as bad happens in your life, start looking for a different way to perceive it. A friend of mine suggests the question – What is right about this that I am not seeing?  I tend to ask myself what opportunities does this present?  These and other similar questions take your mind out of the victimhood mode and put you back in control. It is not about what happens, it is about what you make of it.

For instance, my internet provider was recently acquired by a new company. That new company is forcing its customers to change their emails from the old company email to their new brand.  My initial thoughts, what a huge waste of time. I also have concerns that there will be problems created if I am not totally thorough and successful in getting my email changed everywhere it is used as a “user id” or is the sole contact info someone has for me.

In looking at this situation, there is no doubt there is work to be done and lots of it. It is also on their timeline, not one of my choosing. It is annoying to not be in control. Where are the opportunities?  First, I acknowledge that I should have known better when I chose to use the internet providers’ email, rather than setting up my own brand. So, this is forcing a change, and I can do better. I set up my own URL with email service so that I can control this as I move forward.

The second opportunity this presents is that I will soon be free to change internet providers. I was captive while using their email. Their prices have gotten outrageous, and their service is sometimes lacking. I have not made a move because this didn’t seem to be the best use of my time. Now that it’s being forced, they will be losing a customer.  Unintended consequences for them, but I have found opportunities that are helping me approach this change with a better attitude. One other side benefit is the elimination of tons of spam emails that have crept into my life over the past 20 or so years since I last changed email addresses.

There are benefits to be found by going through times in your past where you still have feelings of being a victim, or any other negative emotions. If you can rework your thoughts to look for what was right about these times and the changes you were forced to make, there are still opportunities to be captured. The more you do this, the more you can free yourself from the control the people, events, or circumstances involved have over your ability to prosper.

In my life I have a treasure trove of these types of things. Each time I investigate them, I am rewarded with insight, opportunities, and growth. It always amazes me what I find out about myself. The more you do this, the easier it will be to pull yourself out of depression, fear, anger, and other emotions that come from feeling out of control.

Jane Garvey is President of the Chicago Creative Investors Association.

By M. Jane Garvey

Many investors get into real estate because they like to know that there is something physical and tangible that they are buying. It is perceived as lower risk than some other investments. In the case of providing housing, we are providing a much-needed service, so the presumption is that there is an inherent value.  In a perfect world with property rights, this is true.

One of the measures that many people use to determine if an investment is worth making is the risk vs reward. For instance, a small investment with a huge possible reward is frequently perceived to be worthwhile – putting 5¢ into the slot machine that may return $1000, or $1 into the lottery that may return $2,000,000.  Even though the long odds of winning may make both of these have a negative expected value, they are still perceived by many as a chance worth taking. When played over the long run “bets” with a negative expected value will lose.

Real estate investments also come with risks and rewards. Both are less well defined and have less certain outcomes than the slot machine or lottery example above. They also frequently require more of an investment, both of time and money. Financial modeling is one of the things many investors do to try to determine the potential outcomes for a deal.  If I invest $X today, I will receive an income of $Y-Y⁺ per month, net of costs, for the next 5 years, and then when I sell the property, I will receive $Z in net proceeds. We make assumptions in the modeling process about what rents and expenses will be, what sales prices will look like, what the transactions costs will be, and more. The devil is in the details in this analysis. Two investors can look at the same property and see vastly different scenarios. There are no right answers, except when looking at a deal in hindsight.

Many investors look at economic forecasts to try to incorporate inflationary effects in their modeling. This is not an exact science either. Today we see investors trying to predict the next downturn. Some advisors are suggesting strategies that reflect their beliefs about timing and severity. Everyone has a different opinion. Some of these opinions are even based in experience or economic modeling. None of these opinions are guaranteed.

One thing that many investors seem to be overlooking, or even ignoring, is political risk. In my perspective, this is one of the biggest risks we are facing. It has always been there, but today property rights are taking a beating in the halls of government. Rent control, restrictions on screening for evictions or criminal behavior, prohibitions on evictions during winter, fines for leaving property vacant, restrictions on using property at its highest and best use through zoning, impact fees, and on, and on. We need to make better decisions about what we buy and where we buy it to mitigate these risks.

I recommend that you start looking around and making plans. Other geographic areas may offer less political risk. Other investment types may be less of a target. Do some exploring, before you need to get out. Real estate is not liquid. It will take some time to shift, so be prepared.

One of the things we hold dear as investors is that we should be able to see a return on our investment. We recognize there is no guarantee. We are at risk to the economic conditions, the weather, changing taste in housing, and many other variables of a free market. In today’s society there is an ever-increasing drum beat of “housing is a right” for those who we rent to. They do not have ownership, so they should only have the rights given to them in the contracts they sign to lease the property. Unfortunately, as investors, we need to realize that we do not have the votes to carry the day at the polls. We can also only go so far in using logic to change peoples’ minds. I feel strongly that we need to include the risk of legislative change in the list of risks we are facing. The returns need to go up to account for them, and if they don’t our investment money needs to go elsewhere.

In the Chicago Creative Investors Association’s Code of Ethics, we state:

“…The acquisition, ownership, management, and disposition of real estate or its contracts (hereinafter the RE Business or RE Industry) is a highly regulated segment of our free enterprise system that entails substantial risks, and we who freely assume those risks are entitled to a suitable profit.…”

Unfortunately, that view is not shared by all.

Jane Garvey is President of the Chicago Creative Investors Association.

Over many years, I have observed that some residents in my rental properties will disable or remove smoke detectors. I install them in all the required places and make sure that any battery-operated units have new batteries, and the residents have instructions. I go one step further. I show them each unit, demonstrate that it works, and have the resident sign that they are all in place and working on the move-in date. I emphasize the importance of these devices for safety. The lease calls for the renter to check them periodically, make sure the batteries are replaced, and notify me if they need help with this, or if units need replacement.

Disappointingly, I frequently get properties back from vacating renters where the detectors are in a kitchen drawer or missing altogether. If they are still in place, they are often missing their batteries. I used to think residents were using them as a source of batteries for kids’ toys. Despite a new law in my state requiring 10-year sealed battery detectors in residential units that aren’t hard-wired, I suspect the problem will persist.

You’ve had it happen. You’ve been annoyed by it yourself. A detector gets set off by something that is not a problem, but the ear-splitting alarm is painful. Steam from a shower, some fumes from the kitchen, or other temporary disturbances set one of your detectors off. The good news is, there are ways of dealing with an annoying detector other than putting your family at risk by removing it. The bad news is, doing an internet search on how to reset a smoke alarm is not something that is easily done while it is blasting in your ear. So, prepare for it and learn how they work beforehand.

In the case of your renters, teach them ahead of time. When you are having them agree in writing that all units are in place and operational, you can show them the reset buttons. This goes for hardwired detectors as well. Your renters will forget almost anything you tell them as they are moving in, so reinforce this a few weeks later. An email is a great way to do it. If your renter needs assistance with any of these things, make sure you provide it. Smoke detectors may be an occasional nuisance, but they do save lives.

Jane Garvey is President of the Chicago Creative Investors Association.

“Whether you think you can, or you can’t, either way you are right.” Henry Ford

It is no secret that attitude can be everything in making things happen. Believing that we can achieve our dreams is one of the most surefire predictors of whether we will or won’t. So, how do we use this knowledge to our advantage?

I am going to suggest that we change our language. There are powerful words that all of us can use to spur creativity and help us find solutions, and there are words we use that shut us down in resignation to our fate. Make the right choice and you will start believing that you can. That is a very important first step to success.

Looking at the quote from Henry Ford, we want to change our thinking to “I can”.  See how the words “I can” feel?  In some circumstances they are empowering, but in others we may not really believe them. Think of something you would like to be doing, but aren’t. Do you believe you can do it? If you believe you can, why aren’t you?  What is holding you back?

I find the words “How can I?” to be very powerful when I am feeling like I can’t. When I use these in connection with something that I would like to be doing I suddenly have a whirlwind of thoughts and ideas. Very often it helps me change my energy and attitude about the possibility of success. Use them in a group setting and you will kick off a brainstorming session that may very well produce the answers you are looking for.

Sometimes we setup barriers for ourselves because we are afraid. New investors may say: “I don’t know what to say”, or “I don’t have the money”. These excuses can stand between them and their dreams for years. The question “What should I say?” will open the door to ideas and may get you started on searching and learning. “How can I do this with the resources I have?” or “Who do I know that can help me with the money?” are both questions of exploration that will help you resolve the money barrier.  Some committed investors with a “can do” attitude just proceed confidently in pursuit of their dream and find that even though they may stumble a few times, eventually the barriers fall away. You do not need to be perfect to do it, doing it is what is important, and you will find that “practice makes perfect”.

So, the questions of exploration which get our ideas and creativity flowing often start with the words How, What, Where and Who. Use them to expand your ideas, your thinking, and your actions. Using the same words you used to make an excuse, and turning it into a question can make a huge difference, and just may change your life.

For instance, turn:

“I can’t ___________” into “How can I ___________?”

“I am afraid to __________” into “What can I do to make me more comfortable doing ______ ?”

“I don’t know how to _______” into “Where can I find out how to ________________?”

“I don’t have ___________” into “Who do I know that can help with ___________?”

Every January I hear people talking about their New Year’s resolutions. For many people this is an annual exercise in futility. They say things like “I am going to give up _______”, and then they proceed to do so for a few days, weeks, or even months. The whole time they are doing it, they are feeling deprived, and eventually they go back to their old habits. What has gone wrong? In my opinion it is the simple fact that they were relying on will power and denial. Will power can only carry you so far before the effort is too much, and denial makes you think that you are deprived of something you deserve. Neither works very well for long-term success.

Here is another approach that has proven successful. I have a friend who chose the words, “I am” to define himself as what he wants to be. For instance, he said to himself “I am a non-smoker” as he quit smoking.  If you define yourself as a non-smoker, and keep defining yourself as this, then your behavior has to come into alignment.

One of the powerful things about the phrase “I am” is that it is in the present. Changes to our behavior and our thinking are things we have to make in the present.  We can make plans for the future, but the actions we take today are what make those plans come to fruition. So, whenever possible change your words to the present tense, and then take the action associated with them.

“I am going to make 5 offers.” Using the words “going to” changes this to a future action so it is nowhere near as powerful as saying: “I am making 5 offers.” Even if both actions are actually taking place in the same time frame, one has more certainty with it than the other, making it more likely that you actually do it.

We also use questions to explore the dark side: what went wrong, why didn’t I get the results I expected. To me, these questions feel heavier than asking “What can be learned from this? or How can I improve on this?” The earlier questions invite us to explore the problems, the later questions invite us to explore the same problems but in a positive, solution seeking manner.

I recommend that you listen to yourself and the words you use. Pay particular attention to the way you talk about the things you want to change in your life. How do the words make you feel? Are you empowered by them? Do they invite exploration of possible solutions. If not, change the words. Success can be as simple as choosing the right words in our self-talk.

Jane Garvey is President of the Chicago Creative Investors Association.

By M. Jane Garvey

Jane Garvey says investors that have been through a crisis can tell you how important it is to have backup plans. Notice, I said backup plans, not just a backup plan. Flexibility is needed to not only survive, but to thrive. These plans relate to all matter of things in your business. Of course, the time to be thinking about them is before they are needed. If you wait until they are needed, you may be the guy trying to buy a generator in a power outage, sandbags in a flood, or find funding as banks are failing.  If you wait for the crisis to hit you personally, your stress levels may quelch your creativity so you can’t even think of ways to deal with the problems you face.

“Expect the best. Prepare for the worst. Capitalize on what comes.”  Zig Ziglar

Zig Ziglar hit the nail on the head with this statement. If you are paying attention and preparing, you will be better prepared to thrive rather than just survive. Be the one who has umbrellas to sell in the downpour, shovels and snowblowers to sell as the snowstorm approaches, and excess toilet paper to ingratiate yourself to your friends when they run out. Finding a need and filling it is a winning formula for success. Even better, anticipate the need and be prepared.

What got me thinking about this topic today was some news I heard about credit being pulled by a bank due to a person being outspoken against the current administration. While that is another topic that we need to deal with, it is not the point of today’s article. Being prepared is.

Funding!  If you rely on bank financing to do deals, you should make sure that you have alternate plans in place. The fine print in many agreements for Home Equity Lines of Credit, Business Lines of Credit, Credit Cards, and other funding allows the lender to pull the funding at any time. Sometimes it is just the additional available funds that are pulled. This can be horrible if you are counting on those funds to finish out a rehab. Funds that you have already borrowed can sometimes be called due as well. Read the fine print so that you know what you have signed up for. Some of the most brilliant people I know have been caught unprepared when funding disappeared overnight.

It may seem unbelievable that lenders would pull financing when borrowers are current on their payments. Trust me, it has happened, it does happen, it is happening, and it will happen! Your ability to survive an economic shift may be dependent on your preparedness and willingness to have backup plans in place.

Lenders will also pull funding commitments when the borrower’s circumstances change. Try losing a job, losing a spouse or a business partner mid deal. You will quickly find that the lenders look at you differently.  If you have deals under contract, what are your plans if you can’t close them because your funding disappears?

For funding safety, I would suggest that you always have accounts at more than one bank, and if feasible a credit union as well. Build a relationship with each of them. Have some private lenders at the ready too. You should develop relationships with friends who could bring strong credit, money, or other assets to a transaction for a piece of the deal if needed. Having these relationships in place may necessitate giving up some of your profits when you don’t need to, so that they will be available when you need them. You may be able to use these same relationships and connections to solve other people’s funding problems.

Right now, there is tremendous inflationary pressure on our economy. The relentless spending by government is only adding to the likelihood that we are in for an economic day of reckoning. While it is tough to predict what exactly this will look like, I would suggest that you learn everything you can about seller financing. Practice using it as well.

When I started investing in real estate, interest rates were in the high teens. People were getting double digit interest on their savings accounts. Lenders wanted 18%+ for mortgage rates if they were willing to lend. Strangely, people still were doing deals.  Why?  Because life happens. People get transferred, people get old and need to move out of their homes, people die and their heirs need to sell their property, people get divorced, people lose their homes to foreclosure, etc.  On the other side of the coin, people get transferred or promoted and want to buy a home, people inherit money and want to buy real estate, people get married and start a family and want to buy, people retire and move, life goes on.

Life continues to happen, even in an economy with huge inflation. There is a need that needs filling. We managed to successfully do deals by giving the seller more on their money than the bank would, while we paid less than the bank would have charged.  Sellers were willing to listen since buyers were somewhat scarce. The main hurdle that needed to be cleared was the middlemen that didn’t want the buyer and seller to have a conversation. Some of the smarter ones were more open to the conversation happening during this time since they were not getting paid if the deals didn’t happen.

Bank funding was available for rehabs, and the high interest rates were more tolerable for short term. That worked while real estate was a part time gig. After we quit our jobs and found that banks were reluctant to lend, we used partners who could enhance our credit so the banks would lend us money. The key to success in all of this was creating deals that worked for everyone and building relationships that allowed for the partnerships.

Take the time to look for vulnerabilities in your current strategies and situation. The time for developing your back up plan is now, before you need to implement it. Prepare so that you can not only survive, but thrive, in the changing market.

Jane Garvey is President of the Chicago Creative Investors Association.

by M. Jane Garvey

Real estate investing is a complex business with many moving parts. The intricacies of the various businesses under this umbrella description vary from state to state, town to town, subdivision to subdivision, and even building to building. The requirements change by the day as people in regulatory positions feel the need to add restrictions via laws and mandates.  Yet, somehow, generic online advice is perceived by many to be all that is needed. We live in a world where you can access tons of advice online for free. And you can also pay a fortune for advice from self-declared experts that may or may not teach you what you need to know. With either one you can still end up in trouble.

Sometimes it blows my mind that the real estate rental business is a business that many feel they can handle with ease. They buy a home, handle a few repairs, and maybe were a tenant at some point – “how tough could this be?”. I have seen friends and neighbors dip their toes into the business without even considering that they are becoming investors by keeping their old residence as a rental when buying a new home. I have also seen contractors jump into the rehab business without understanding it. Some succeed, some don’t. The worst outcome of this blissfully ignorant approach to the business is harsh laws and horror stories that affect all of us.

As one of the gray haired “boomers” in the business, I marvel at how many new investors casually dismiss advice from anyone over 50 – as if we have little relevant advice to offer. They instead turn to anonymous strangers on the internet who will answer their question in a chat. Personally, I know that I have had many experiences and learned along the way.  I wish I had listened and learned more from those that went before me. Just because a seasoned veteran is not as tech savvy as you and your friends, you should not casually dismiss their input. It is likely that they have experience in working with tenants, contractors, sellers and buyers that can be quite valuable and is not easily learned elsewhere.

Likewise, experienced investors might be quick to dismiss the ideas and advice of the newbie. This is not appropriate either. Many young people have a better understanding of tech and the future demands of society, and the pressures on the industry to change. Some come with a lot of experience as they may have grown up in the business.  We can all benefit from keeping an open mind when it comes to learning from others.

So, who should you listen to?  I give more credence to those who can tell me where to find the answer. I don’t want someone just telling me what they have heard, or what they have been doing, which may or may not be legal. Where did they get their information? Where can I look things up? If the rules are changing all the time, a one-time answer is not going to be good enough. I may accept that answer, but I will need to know how to update it.

We should all develop relationships with appropriate competent professionals who keep up to date on their fields (ie accountants, attorneys, Realtors, bankers, material providers, and even contractors). The best professionals often provide information to their clients that will keep you informed in a more general way, and then can customize their advice to your circumstances.

We should also develop relationships with people that have the wisdom which comes from age, personal experience, i.e. other investors who have and are doing the things we would like to do. These people have expertise that can supplement the advice provided by professional advisors. You also need a means of staying up to date on changes in the game – market shifts, new laws, etc. I think one of the best places to look for this is a legislatively active investors association. The best of these have like-minded individuals that keep up to date and share information. These relationships can help you be proactive rather than reactive.

Whatever advice you get, from any source needs to be run through your filters. Is this a source I know and trust? Is the topic within their range of expertise? Is the advice relevant? Will it be relevant later?  Is it correct in general, and more importantly, is it correct for me?  Your filters will get more discerning with time. Learn to fact-check. I am using this term with its original meaning. If you are told something that doesn’t fit with your understanding, ask more questions, and go do more research. Don’t just listen for the answer you want to hear, but get to today’s truth.

Advice comes at us from all directions. Over the years I have found very little correlation in price paid for advice to the accuracy of the advice. The world is full of self-proclaimed experts. Some have fancy websites and expensive packages, others have nothing more than a keyboard and a willingness to answer anyone about anything. Some good, some bad, all needs to be vetted.

The best advice I have received over the years has come from seasoned veterans in the business. They are friends and fellow investors with whom I have taken the time to build relationships and trust. Most of these “true experts” do not have websites, let alone fancy ones. Most do not expect to be paid, other than via a mutual sharing of information and ideas. They belong to associations so that they can stay informed and get ideas. In turbulent times, the shared expertise available is invaluable. It is usually hyper-local and hyper-focused and incredibly necessary. Your local investor association members are the fact-checkers for the information you gather from other sources.

Jane Garvey is President of the Chicago Creative Investors Association.

By M. Jane Garvey

Cucumbers are just too expensive!  We have a right to cucumbers! We need more affordable cucumbers!

We find a legislator that agrees with us. They write a bill legislating that cucumbers can’t be sold for more than 5¢. We are thrilled and we get everyone we can think of to support the bill in the hopes of it passing.  Sure enough it passes.

Now we can buy cucumbers for 5¢. We are thrilled.

The grocers have some cucumbers in inventory.  They sell them for 5¢.

The shippers have some cucumbers in the truck on the way to market.  If the cost of delivering them is prepaid, they deliver them.  If the cost of delivering them is not pre-paid, but they have a solid contract, they deliver them. So, the grocer probably has some additional cucumber supply from the pipeline.

The farmer has cucumbers planted.  Is the cost of harvesting them, shipping them and selling them less than 5¢?  If so, they may harvest this crop and ship it to market. But, when it is time to plant next years crop, they will use their time, money, and land to provide the best return possible, and cucumbers with a restricted price won’t be planted.

Now we have a cucumber shortage.

Some of the citizens will plant their own cucumbers.  Some will plant extra to give to their friends and family.

Others will yell and scream, protest, and demand that someone get them cucumbers. After all they are a right, we all have a right to cucumbers.  It is a human need!

So, the same government that helped out earlier looks to how they can help.  They never look at lifting the restrictions on price, because they would have people protesting again that cucumbers are too expensive.  So, instead they invest millions of taxpayer dollars to buy land, plant cucumbers, invest in equipment to harvest the cucumbers, and then sell it to the consumer at a price of 5¢.  The cost of the government growing the cucumber, with all of the bureaucracy and corruption involved, is 3 times what it costs a farmer to grow cucumbers.  But, the people who think cucumbers are too expensive and we need to have a price control are not looking at the true cost to society, or even to themselves.  All of our taxes go up to help pay for their cucumbers.

Alternatively, the government subsidizes the farmer through tax incentives to grow cucumbers that can come to market at 5¢.  Soon the farmer is demonized as a greedy lowlife who is ripping us all off.

This story is developing all around our country as private enterprise is being demonized and controlled and eventually the goods and services are being replaced by government operation at far higher cost.  The movement discourages investment, innovation, and destroys our free market.  Keep your eyes open and you will see many instances of this.  Please react accordingly and tell the protesters the story of cucumbers.

M. Jane Garvey is President of the Chicago Creative Investors Association.

One of the things that really concerns me in today’s world is the amount of advice being casually asked for and given on the internet about legal matters. Currently, we are in a period where the number of new regulations, laws, ordinances, mandates, and rules coming at us is overwhelming.

Legislative experts are struggling to keep up as this information is changing by the day, and the subtle nuances of the legislation takes careful study to understand. Some of these legislative changes come with huge penalties if you get them wrong. This is not a time to take casual advice about the law from internet strangers with unknown credentials and nothing to lose.

These “experts” think they are being helpful, but I personally have witnessed them answering questions with false information, and then defending their answers when challenged. Just because they might be doing it doesn’t make it legal.

• So, what should you do?
• Where can you look for reliable information?
• How can you stay up-to-date?
• How can you make sure you are operating your business within the law?

First, you must realize that your facts and circumstances are unique to you. Your choice of investments and investing goals matters. Not every property will be a match. Some may be too much risk.

Learning the Law and Keeping Up-To-Date:

You may have ordinances at the community, township, county, state and federal level that vary from those in other locales. You may also have a Home Owner’s Association (HOA) with rules to follow. You will need to follow the “laws of the land” promulgated by our “friends” from our neighborhood all the way to Washington, DC. No one person is going to have all of the answers that fit you and your investments without some background and study.

Start at the hyperlocal level:

If you are considering buying in a complex or community with and HOA, ask the association for the current HOA docs and read them. Make sure that your plans for the property are doable. Can you rent the unit? Can you do a short-term rental? Can you combine 2 units for a larger residence? Can the residents have pets? What do the dues cover?  How much does the association have in reserves compared to the budget?  Read the minutes from recent meetings to see what the issues are that the complex is dealing with. These are all important things to consider if you are thinking about buying units in an HOA. If you decide to buy in an HOA, keep up to date by reading the notices, minutes, and budgets you get from the HOA.

At the municipal level:

Ask questions, read ordinances, talk to the City inspectors and the police departments, read local newspapers, read the City Council minutes for the last few months, talk to local real estate agents, other local investors and residents, and get an idea of what is going on. The officials that enforce the ordinances that pertain to housing should be able to tell you what things will apply to you and where to find them. Check with the alderman’s office for some help in navigating the local bureaucracy. It may seem like lots of work, and it is. These connections and local knowledge will pay off if you decide to invest in the area. To keep up to date once you have purchased property, keep reading the city council minutes, community newspapers, and if available join a local property owner’s group that provides advocacy.

At the County level (and Township level):

There is often another whole set of ordinances pertaining to housing. These can cover property that is not in an area that is physically incorporated as a City, but some of these ordinances apply to all property in the County. Building permits, fair housing laws, property taxes, and rental regulations are all important.  Like with the City, investigate. Talk to the people who enforce the building and housing laws, real estate agents, investors and residents. Talk to Judges who handle evictions. Read the minutes of the County Board meetings and read the local news. All of these sources will give you hints of what you need to look up and verify. As the laws are changing regularly, you will need to keep reading County Board meeting minutes and local news. You should also make contact with County Board members and let them know you want to know about any issues that arise that will affect your business. If one is available, join a local property owner’s group that provides advocacy at the County level.

At the State Level:

In Illinois, the state has been very active in regulating housing. The Illinois Rental Property Owners Association has been monitoring proposals and advocating on behalf of rental owners and investors for 26 years. We have found that there are usually about 50 bills a year proposed to change existing (or introduce new) legislation on housing or real estate investing activities. Not all of them pass, but each year there are changes that need to be incorporated.  You may find that similar things are happening in the State Legislature where you are looking to invest. It is very important that you learn what the laws are and pay attention to changes.

At the Federal level:

There are laws that need to be learned about and followed. Several of the major ones you need to know about are the Fair Housing Law, the CDC Moratorium on evictions, the laws on service animals, and the Dodd-Frank Act and its impact on seller financing.  The National Real Estate Investors Association is a great source for information about the changes happening at the Federal level. National REIA has advocates working on behalf of the industry in Washington.

There is another whole set of regulations that apply to participants in the Housing Choice Voucher programs (some locations mandate that you do not discriminate based on Source of Income – in other words you must consider Voucher holders). The local Housing Authority will be the best source of information on what you need to do to follow these regulations.

Since things that passed several years ago are no longer news but still are laws, you will be well served to find the parts of the code that pertain to housing and read them thoroughly.

Seek advice from legal counsel that specializes in real estate and is local to your area. As I mentioned earlier, even the best experts are struggling to keep up with the changes at the moment. With that in mind, you will need ongoing advice from professionals that are familiar with your investments, strategies, and techniques. Professionals that provide regular updates can be extremely helpful. They should be able to give you advice on how to deal with laws that conflict.

All of this may sound overwhelming. Frankly, it is at the moment. The point is that the casual “expert” responding to your inquiry on the internet is unlikely to have done the homework on your specific investment. Sometimes they are not even from your area, so the laws they are discussing may not even apply.  There are no consequences to them for getting it wrong! Do your own due diligence and hire qualified professionals with errors and omissions insurance.

M. Jane Garvey is President of the Chicago Creative Investors Association.