Jim's Blog

Meet Jim Shiels 

Jim Sheils is an author, speaker, and international investor. He is also the co-founder and owner of Rincon & Titus Solutions, L.L.C. a private real estate holding company that invests in single family homes in Jacksonville, Florida.

When starting out in Bakersfield, CA in 1999 he had no money and $2,000 in credit card debt. Along with Brian Scrone, his business partner and best friend since the age of 3, they built up a multi-million dollar portfolio of over 100 single-family homes and were given an award of recognition by the Mayor’s Office in appreciation of their highly received rent-to-own program. Ignoring the media and listening to the fundamentals, they sold off their portfolio, in Bakersfield, at the height of the market in the summer of 2005 and relocated to Jacksonville, Florida. They continue to invest in single family homes there today. To date, they have purchased over 300 investment properties in their career.

Jim has a passion for education and has spoken at events all over the world. Audiences are always captured by his grass roots style of teaching that is enjoyable and easy to understand. Jim’s two famous sayings are “Education is useless if it’s too confusing to apply” and “The media is always late to the party whether it’s good news or bad news.”

Jim is an avid surfer and travels the world with his “Board Group” which is a team of international businessmen and investors that enjoy networking and surfing together. He is scheduled to release a book in the Spring of 2009 based on the business and life lessons that he learned on these surf trips.

Jim lives in St. Augustine, Florida with his boxer, Dibo.

Recap on Recent Months

AFFORDABILITY IS STILL THE KEY!!!!!!!!!!!!!!!

Hello again! I've been away from the writing table for a little while but it's not because I haven't been active. In fact, I would say this is the busiest we have been since the spring of 2003. So I wanted to give a recap of some big events that have occurred recently. We continue to buy a volume of over a half dozen homes a month which keeps a full but manageable plate for us and our team here in Jacksonville. While most people continue to listen to what I considered mostly skewed and "co-mingled" statistics from unreliable sources, our business continues to listen to the fundamentals we are seeing. Fundamentals like selling houses on the open market last month in 8 days for close to full value or the fact that our "niche properties" are continuing to be rented within 3 weeks of marketing them. Also, listen to the media or listen to someone in the game full-time. But I'm telling you, here in Jacksonville, the $8,000 tax credit is working and has awakened a score of new buyers.

How is this all possible ???

Answer: Affordability is still the key!!!!!!!!!!!

I will get more into this but first let's recap some big events to support it.

First, we had the pleasure of hosting a group of our real estate investors in our home market here in Jacksonville for an incredible event. For the first time ever, we opened the doors to our business and allowed fellow investors to see it inside and out. They got to meet the people that make it all happen for us, REO brokers, contractors, Property Managers, insurances agents, leasing agents, our personal staff and many more. We also went through many of our niche homes that were in different stages of the turnaround process which gave huge clarity to our investor friends. Not only did they learn the exact type of home we prefer but also learned the type of neighborhood we stick to and saw some advanced techniques in motion for rehabbing a home the right way. I was amazed at the benefits our fellow investors said they got by being in the trenches with us and seeing our investment properties in person. "It made everything click" was the common feedback I got. With such a demand and with such positive feedback we will be hosting another group of eager investors here in the Fall.

Second, We had the opportunity to spend a week in Calgary with our friend Greg Habstritt and got the chance to attend one of his incredible events. Some of the top speakers and investors in their field were there to speak live and network with the students. I took full advantage of spending time with Greg, Deb Ponerman, Peter Schiff(Dr. Doom), Janet Attwood, Gary Goldstein( producer of "Pretty Woman) and many more. With such a diverse group, the masterminding was incredible and I came back to Jacksonville with some great ideas to implement into our business immediately. I also got a ton of ideas from the many colleagues and students that I had the pleasure of teaching with in the past. It was great to see them developing into such successful investors and by discussing the fundamentals of so many different markets you pull out some incredible clarity. However, the biggest clarity I got: Affordability is still Key!!!!!!!!!!!!!! Didn't matter where you were in the country, as an investor, the ones doing the best were the ones in the "affordability arena". And there is more to it that I really need to share with you. Take this info, write it down. Remember it! It can save you headaches and make you millions!!

"Buy Affordable, buy 3 or 4 bedrooms with 2 baths, buy in solid neighborhoods that have owner occupied residents, and buy houses where the cost to rent is the same as if they were to buy the house full price and mortgage the whole thing"

This is it. That is the secret that took me hundreds of deals to uncover. If you break this code above you can still make money but you put yourself at a much larger risk. This might seem like a repeat message but let it sink in. Keep to this simple theme and raise your profits and mitigate your risks. I could list tons of data to support my claims but I'm not going to bore you with the stats. Take it or leave it, you want property that holds value? Stays rented? And can be resold even in a market like we are seeing today? Then follow the formula above, you'll thank me later!

The Media is Always Late to the Party 

"If you don't ignore the media and buy real estate now, you'll hate yourself later".

Have ever noticed that most of the media is late to the party whether it's good news or bad news?

I've never seen this proven more clearly than it was in the summer of 2005. Tons of press was touting Bakersfield, California and Las Vegas, Nevada as the "Hot Spots" to invest on the west coast. "Get in now! Double-digit appreciation with no end in sight" was the common message. Unfortunately, people listened and began to run to the slaughter by buying at the top.

It was at this time my business partner and I started selling off our Bakersfield portfolio at a rapid pace. The equity ride was over. If people had just paid attention to the underlying numbers and indicators of where we were at in the property cycle, they could have read the writing on the wall. Unfortunately, many people listened to media hype instead and got crushed.

Today, most of the media is still screaming, but the message now is "Stay away! Real estate expected to keep falling with no end in sight!"

So here is the question: Should you listen to the media hype?
Should you sit on the sidelines?
Or would it make more sense to look at the fundamental numbers and realize that right
now, we are in the best stage of the property cycle to buy?

Sit on the sidelines today and you will miss out on the biggest transfer of wealth in Real Estate history since the Great Depression!

However, if you do miss out on this great opportunity, don't worry. A few years from now, the media will tell you when it's a good time to buy real estate again. I just hope for your sake that they're not late to the party……AGAIN!

Remember, real estate is and always will be a cycle and is geographically specific. The key is to buy low and sell high in a fundamentally sound area. Don't overcomplicate the game. And listen to people who play the game! Not to people who just write about it.

NATIONAL HOUSING AVERAGES MAKE AS MUCH SENSE
AS THE NATIONAL WEATHER AVERAGE!

It is amazing the amount of time and energy that is spent putting statistics that have no relevance into the news. My all time favorite though is the “national housing statistics”. These numbers make about as much sense as calculating a national weather average.

Let me illustrate more closely to prove a point. Imagine taking the weather report for New York, Cleveland, San Antonio, Jacksonville and Minneapolis. Put all those numbers in a pot, stir them around and presto, you have a statistic worthy of putting in the newspaper. However, ask yourself this question. Does this number really tell you what the weather is like in your own backyard? Of course not!

Real estate is just like the weather. It still is and always has been very geographically specific. Weather patterns and market drivers (economic growth, population, supply and demand, affordability and desirability) are personalized and vary greatly from one area to another.

Stockton, California has been ranked the worst housing market in the nation but some of its neighboring cities only a few hours to the northwest have been experiencing healthy growth through this entire market correction. At the same time, an over supply of houses in Phoenix it not effecting whether we can keep our rentals filled in Jacksonville.

The reason for this is, the fundamentals for each market are totally different. And please keep an important fact in mind, not everyone experienced inflated growth over the last few years so not everyone will experience the same stormy weather.

Different markets. Different weather. Different fundamentals.

As an investor it is your job to look past the “fluff” and pay attention to what really matters. Know your market and study the specific market drivers that paint the real picture of what is going on where you live. Like the weather, every area is experiencing something different.

The only national housing statistic I feel makes any difference is the availability of financing which is already on the rebound.

So ignore the unimportant facts, invest in the right area and get wealthy today!

The Number One Rule when buying a foreclosure

Just because it’s a “foreclosure”, it does not mean it’s a good deal.

Let me repeat myself in case it didn’t sink in

Just because it’s a “foreclosure”, it does not mean it’s a good deal.

Sounds easy enough but it amazing how many new investors I’m meeting who are willing to sacrifice due diligence and solid fundamentals just because the property is called a “foreclosure” or “REO”.
Cut through the media hype on these over played terms. It’s just a house that is owned by a bank and just like other sellers, the bank is using a realtor to resell the home. And......like other distressed sellers, a bank will sometimes try to list their home for a high sale price hoping that someone will bite.
So don’t bite! Do your homework first! Know your #s and be sure to have a clear strategy that you are confident you can execute. This is crucial.
I promise you that the word “foreclosure” will not save you if you buy a major fixer-upper but have no idea how to get it rehabbed! And the word “REO” will not save you if you overpay for a property.

Keep in mind, out of every 10 foreclosures I look at:
5 houses are total dogs and priced too high
3 houses are “ok” deals but not great
2 houses are really good and worth my time and effort so I will probably make an offer
* And I rarely give the bank what they’re asking for.
Low ball them! Remember they are a distressed seller.

Now is the time to make money! But move forward slow and steady to have the most success. And keep your emotions on the back burner! Listen to the #s, not the fancy words.

Keys to Finding a Good Property Manager

HAPPY NEW YEAR!

2009 brings hope and promise for every investor who follows Warren Buffet’s famous quote “Be greedy when others are fearful”.

The more I study the fundamentals today, one fact is very clear:
Now is the time…..now is the time……….now is the time!!

Buy low now. Sell high later. The patient “buy and hold” real estate investor who is active today is creating great wealth for tomorrow. However in order to take advantage of this niche you need to not only buy the right type of home in the right area but you need to have good property management.

If you are not going to manage your own property, than you need to hire a good property manager. With this said, a lot of investors have been contacting me and asking the big question “How do you find a good property manager?”

I am going to give you 7 golden questions to ask your potential property manager that will increase you odds in finding the right company for the job. Believe me, a good property manager is harder to find than a good realtor! So you want to do your homework on this one. I could write dozens of pages on this subject but the questions below are a good foundation to get you started.

#1. Do they already manage property in the area where your house is located and manage the type of home you own?
If the management company has rentals under management in your specific area already(I’m talking the same neighborhood or close by not just the same city or town) they are much more likely to perform. If they don’t, I would suggest you move on. And make sure they manage your type of home. You don’t want a “high end” specialist managing a 1200 sq foot home in a “regular Joe” neighborhood or vice versa.

#2. Do they own their own investment property?
Property Managers who have “skin in the game” have a better knowledge and almost always do a better job. Period.
The broker/ owner of the property management company we work with owns several rental properties and it shows in the company’s performance.

#3. How many houses does the company have under management?
If a property management company manages less than 100 properties and is in a market with a population of over 100,000 people, I consider them a very under developed management company. I suggest you move on to the next.

#4. What is their rent collection & eviction policy/process?
If they can’t give you a direct response on this part of their job……
RUN AWAY!!!!!!!!!!! It will save you a lot of pain in the future.
A good management company has a very clear system and is no nonsense on rent collection and evictions. This might sound a little harsh but your mortgage payment is due every month no matter what happens.
Take it from a guy who lost a lot of money in the beginning of his investing career but letting his “heart get bigger than his head”. Unfortunately tenants can take advantage.
Charity is a great thing that I encourage but please don’t combine it with your rental portfolio! Keep the two completely separate.

#5. How will you get my property rented?
Make sure they have a strategy to fill your vacancies!

#6. Fees?????
This is a big one. How do they earn their money?
A good management good company usually gets a one time fee for filling the property initially and then a percentage of collected rents. If they are not collecting rents they shouldn’t be getting paid! In our area standard fees are 10-12% but can go as low as 8% and as high as 14%. I realize these fees can vary in different areas so again, do your homework on what is standard for your area.

Avoid a management company who uses maintenance or repairs as a profit center! They should take care of this as part of the job at par pricing, no add-on fees! Do not allow a management company to make a repair over $250 without your permission. Also, as far as marketing the property, they should not charge extra fees for marketing the property.
With all this said, I wouldn’t recommend just choosing whoever is the “cheapest” without weighing all of their skills! I made this mistake when first starting
out as well!

#7. How do I get my money/ statements?
A good management company should have auto-deposit available for you into whatever bank account you choose to receive your rental profits. They should have a specific date for depositing the rental profits and you should also receive a management statement every month to review the performance of the property. (we prefer email)

If you ask these 7 questions, you are taking the time to do what most people don’t take the time to do and they get hurt because of it.

Remember: The key to a “buy and hold” investment is good management so choose wisely!!

3 Magic Statements to Tell an REO Realtor

After the Simple Wealth event in Canada this week, there have been several requests for me to write a blog on working with REO realtors.

So here goes. To start, REO realtors are realtors who have been hired by the bank to resell properties that the bank have had to foreclose on.

Banks are the most motivated sellers out there right now and it is always better to work with a motivated seller. (However, Keep in mind, REOs might not be a good deal in your areas, so do your homework)

In my area, a handful of agents handle the majority of all the REO listings. These agents do volume and are no-nonsense. They mean business. Their time is in high demand so don’t expect them to go out to long lunches with you the first time you meet.
Not to mention, they probably already have a network of investors that they work with.

So how can you get their attention and start buying the good deals through them?
Here’s how.
The 3 Magic Statements below can get your foot in the door and start you on your way to real estate wealth.

A GOOD REALTOR CAN MAKE YOU $$ MILLIONS!!!!!

But also remember what my friend Keith Cunningham always says “Get in line”.
Meaning it will probably take some time to get to front of the line where the best deals are but trust me, it is worth the wait!

1) “I will not waste your time”
Say this right away and then tell them exactly what kind of deal you are looking for. PLEASE do not start reading off a script of questions from the last investing book you read, you will really irritate them. Just be natural and friendly.
Let them know however that you need to buy at a discount to make the #s work for you.
Assure them if you tie up a deal you will close on it. REO agents really dislike it when someone puts a house under contract and then it doesn’t close.

2) “I have funds ready to buy deals with”
Let them know that you have access to cash. It might be smart to give them proof of funds the first time you meet(credit statement, bank account, approval letter from a local hard money lender) If you don’t have any of this yet, don’t worry, just assure them that you can perform.

3) “I always give you both sides of the commission”
THIS IS HUGE!!!!! Money talks. Let them know right up front you are not working with a buyer’s agent and you want them to keep all the commission. Even if you are an agent don’t worry about the commission, make your money with the deal.

Make these 3 statements upfront, shows some perseverance and you can open up an unbelievable pipeline of profits in the future.

CAN IT GET ANY BETTER?!!!!!

For the most part, I am not a big fan of the media. However, I am a believer in Forbes Magazine and feel it to be a no-nonsense source of financial and economic information. And I know I usually keep my blog writings about more general information but I needed to talk about my backyard of Jacksonville FL in this one.

I got a pleasant surprise when an investor friend forwarded me an article this morning from Forbes that named Jacksonville as the #1 market in the nation predicted to have the most positive response to the housing rescue act.

Click HERE to read the Forbes Article

Now, I have to be honest. I do not believe in the “bailout” programs and I know a lot of my fellow investors do not either. I don’t recall the government bailing any of us out over the years during hard times. (Nor should they)

We always felt the full brunt of our mistakes. (And I’ve made plenty!)
And deep down, we all know that feeling the brunt of our mistakes is a good thing, a blessing in disguise. Hard times and temporary defeats make you smarter, tougher and teach you lessons for future success. Pain can be a good thing because it makes you a lot less likely to make the same mistake again.
I only had to touch a hot stove once when I was a kid.

I hope the big boys learn from all this and the government does not soften the blow too much for them. Otherwise, they’ll lose the lesson in all this and try it again in another 10 years.

But with that said, the bailout is happening so we might as well make the most if it.
There’s an old saying, “If you get thrown in a room full of horse manure, you might as well smile and look for the pony!”

The housing rescue program basically gives people in trouble the chance to refinance into a better loan on their home. However if the house is only worth half of what they owe on it, people are less likely to show interest in the program and just walk away.
The reason Jacksonville is ranked the best in the country by Forbes is because of sound fundamentals and foreclosure opportunity. (I don’t really care if the rescue plan succeeds or not as it will not effect my niche)

Why has Jacksonville stayed stable? How can our area be located in the dreaded state of Florida (as the media would say) but the correction that occurred here is even less than the national average??

Simple. It’s because prices didn’t run up like other areas so it didn’t take the fall. Plus, it’s affordable. Affordability is key especially in hard times. Since prices didn’t have to deflate like they did in Miami, people in Jacksonville actually still have value in their homes.

So if some people end up using the rescue program locally here in Jacksonville, great!! It only will better ensure our stable values and gear things up for quicker recovery.

Dare I use the “A” word! (Appreciation)….. no… not yet. But I can see it starting in the not so distant years ahead.

Remember real estate is a cycle.

Now this rescue plan may cause the deal flow to be lighter for us investors but there will still be plenty of REOs to go around. Jacksonville is expected to have a steady flow of them according to Forbes which again is great news!!! This means opportunity! And yes, even with high foreclosure rate values can stay stable if you work your niche correctly. The reason is simple.

There is a trading range in the “starter” home market. It ranges from the low of investors who buy distressed property “cash” and a high of first time home buyers/renters who enjoy the use these home and are only concerned with good condition and having good terms, not price . (Fully Remodeled you say? How much down? How much a month?)

When Brian and I first went into Bakersfield, California in the late 90s, Bakersfield alone had over 30% of all foreclosures in the entire state of California! Some people saw this fact about Bakersfield as a poison, we knew it was a slice of investor heaven. I still wish I had a dollar for every person that turned there nose up in the air at us when we told them we were buying houses in Bakersfield.

“BOYS…….a house is worth what y’all can rent it for” is what our mentor Keith Cunningham always told us and that principle was a guiding light for determining the intrinsic value of a home and for taking action.
This principle along with affordability, population growth, and good underlying economics allowed us to ride the “equity train” to some big success in Bakersfield.
We see similar developments happening in Jacksonville now and into the future.
And FYI, we are filling our rentals in under 3 weeks with great returns. Not bad for “the worst downturn in history”
How is this possible? I can ensure you it’s not because we’re geniuses (far from it!) We’ve just learned a simple recipe that works.
And yes, Jacksonville is a good market but every market still has its challenges.
The biggest excuse I hear today is “Yeah that’s great….. but you can’t do that in our market”

How do you know that? Especially if you’re not even sure what you’re looking for?

Here’s the secret…………………
• Buy in the right area
• Buy the right type of property with the right #s
• Know how to market & manage your property
• Don’t listen to uneducated opinions…. aka “dream killers”

And if you’re not sure how to do all this…

Come to Jacksonville, we’ll show you!

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