October First was always a remembered day when I was growing up. On October 1, 1940, Marcus G. Klein (my dad), enlisted in the US Navy, the “old navy.” As a young boy I would listen with great interest, inspiration and imagination as Pop would tell stories of his navy in the early days. There was no UCMJ (Uniform Code of Military Justice). The disciplinary system then was “Rocks and Shoals.” Sailors would spend their entire career in the “Asiatic Fleet” or in a gun mount on a battleship or cruiser, never being transferred anywhere else. He often said of the Asiatic Fleet Sailors, called “China Sailors,” that once they were a China Sailor, they often never came back but lived out their lives in the Orient.

Pop enlisted in the Navy to fight the Nazis. Hitler was killing Jews. Pop’s family was a second generation German Jewish immigrant family, and he felt it was his duty to join the efforts against Hitler and Germany. At the time, he was 23 years old and working at Anis Furs in Detroit Michigan. Upon his graduation from Boot Camp at Great Lakes, he was not sent to Europe to fight the Nazis, but to the USS Medusa, which he described as a Battleship Tender stationed in the Hawaiian Islands…Pearl Harbor to be exact. His rating was Blacksmith Apprentice at the time.

He met my Mom in Hilo when Medusa was visiting in early 1941, they married in Honolulu by a Justice of the Peace in June that same year, survived the attack on Pearl Harbor and two submarine war partrols in the South Pacific…and in 1949, while still stationed in Pearl, had me. The naval influence in my life was immediate…I was born in Aiea Naval Hospital in Pearl City…grew up as a “Navy Junior,” and graduated from the United States Naval Academy in 1972, followed by 5 years on active duty as a Surface Warfare Officer. These are some of the unintended consequences of Marcus G. Klein enlisting to go to fight in Europe on October 1, 1940.

Pop never made it to Europe, and I for one am glad that he didn’t.

I salute you Pop.

Love,

Saul

I have watched many struggle through this latest recession and real estate downturn, and I am reminded of what has always followed downturns in the past…upturns. I have heard many real estate professionals over my 35 years in this industry; as a broker, office manager, investor and educator, pray to be granted "one more boom." So many agents and brokers in the industry fail to take advantage of the "good times" and only come to the realization that they missed those good times after they are over. So have faith, the market will turn. That is not in question. What is in question is will you be ready to take advantage of the next swing up, for yourself and for your clients?

What makes me so confident that the good times are coming? History. Historically, real estate downturns lead recessions and lag behind in recovery (Real Estate and Business Cycles by Fred E. FoldVary. I have personally experienced this a number of times as a real estate broker. One of the most memorable was in the early 1980's. We had a "Savings and Loan Crisis," The government created the RTC (Resolution Trust Corporation), and folded one Savings and Loan into another…taking over massive amounts of properties and managing (or mismanaging) and disposing of them. The conventional wisdom at the time was that interest rates would never go below 10% again and that real estate was grossly overpriced and only fools would dare to buy. Most people now wish that they had purchased more real estate in the 1980s and held on to it through a few up turns since then. While we may not be at the bottom of the market yet, we are more likely than not, close to the bottom…taking into account geographic differences, in some areas, we may be at the bottom. Now is the time for many to buy…low prices, motivated (desperate) sellers, historically low long term interest rates, and for first time homebuyers, an $8,000 bonus from "Uncle Sam."

Not convinced? Let's examine the record. Tracking of business cycles began in the 1800s and there have been close to 30 measured cycles since the measuring and recording began. As sure as I have lived through downturns in the economy, I expect an upturn. I can't tell you when, but I am confident it will happen. Will you be ready for it?

Success requires planning. Old news. "Not having a plan is planning to fail." Do you have a business plan for your real estate business? Does it contain the essential elements such as a Sales Plan, a Technology Plan, a Marketing Plan, a Website Plan and a Budget? If not, your plan for success is, not uncommon unfortunately in this business, HOPE. HOPE is not a conscious choice, but absent real planning, it is the default choice…the choice you made by not planning. For many REALTORS®, they:

HOPE they will succeed

HOPE they'll get a listing

HOPE the buyer will make an offer

HOPE their sales skills will improve

HOPE their website is visited and generates leads

HOPE they close enough sales to pay the bills this month

While HOPE has its place, it is too passive a way to approach an aggressive, competitive business. Deliberate planning, discipline and commitment are essential elements for anyone who wants more out of a real estate career than a few sales a year…and yet many whom you meet in the business cannot articulate anything close to a systematic approach to selling.

Real estate is a sales business, and sales is all about numbers, ratios, and percentages. What systems and methods do you have in place that will allow you to improve your efforts and your results, week after week, month after month, year after year?

Here are a few HOPEFULLY helpful hints:

1. Create a business plan that is specific…specificity is the key to execution. Begin with your annual goals and break it down into the daily tasks required to get you to where you want to be at the end of the year.

2. Create a Sales Plan - How many contacts are required for each closing? If you are unaware of this personal statistic, you should begin to determine just what it is for you, and then, what you can do to improve on it. Contacts Create Contracts, so set about creating a plan that will maximize the number of contacts and the number of communications with each.

3. Create a Technology Plan that is consistent with your Business Plan. Be sure to establish a budget and a timeline for the integration of the technology into your daily practice.

4. Create a comprehensive, integrated Marketing Plan that includes conventional marketing and is tied to your internet marketing.

5. Create a Website Plan that takes advantage of the marketing power of your listings. A listing is a marketing asset and can be used to bring you buyers as well as other listings. Offered through Allison James is the Point2 Technologies Web Solution which is the best the industry has to offer, take advantage of it.

6. Create Budgets - for your business in general and for each listing.

6. Be Found. Create profiles on social networking sites such as Facebook and MySpace. Use the power of the Internet to connect and reconnect you with people…"Contacts Create Contracts."

7. Take the new NAR Web 2.0 & Social Media Course for REALTORS® online course and begin the transition to a consumer population of Gen X and Gen Y buyers and sellers (http://ePRONAR.com).

8. Differentiate yourself from the competition. Your choice is "Be Different or Charge Less."

9. Become an e-PRO® and join a resource and referral network 40,000 strong.

10. Take advantage of NAR's Program Right Tools/Right Now. Amazing tools and values for discounts and even for free. Check it out.

I HOPE this has been helpful.

Saul

Saul Klein ePRO/GRI/CFP

Saul

Saul Klein

CEO, Point2 Technologies

http://Point2.com

A few years ago I wrote a piece about the heroes in my life (http://www.realtown.com/saul/blog/real-heroes-a-personal-story). One of my heroes not mentioned in that piece was Vice Admiral James Calvert. Admiral Calvert became the 46th Superintendant of the Naval Academy in the summer of 1968 just shortly after my class entered for our “Plebe Summer” and he left that position shortly after we graduated in June of 1972. He was also a contemporary of my dad, who was also a submariner. I know some of you on this list served in the Navy and believe that many of you will find the following of interest.

He was a hero to all of us at the Academy during those years. He passed away on June 3. I received the following this morning:

>> 

From: Rich Robison [mailto:Scribe72@comcast.net]
Sent: Saturday, June 06, 2009 5:33 AM
To: TheGouge@USNA72.com
Subject: TheGouge: LOSS OF VADM JIM CALVERT

We have learned that VADM Jim Calvert passed away on 3 June.  The following from the Alumni Association web site: :

 Retired Vice Adm. James F. Calvert, a submarine pioneer and author who served in the Navy during World War II before going on to be superintendent of the Naval Academy where he made innovations to the curriculum, has died, family members said Thursday.

Calvert, who was 88, died of heart failure Wednesday in Bryn Mawr, Pa., said Kemp Battle, his stepson.

“He was a wonderful man and did a lot of dangerous things,” his wife, Peggy, said in a telephone interview.

After graduating from Annapolis in 1942, Calvert went straight to work on submarines.

“A career submarine officer who began his service during World War II, he completed nine wartime patrols and later served an instrumental role in the development of modern submarine operations,” the academy said in a statement.

He served on the USS Jack for eight war patrols and another on the USS Haddo during World War II. The USS Jack, on which Calvert helped aim the torpedoes, is credited with sinking 15 Japanese ships.

Calvert wrote several books. In his 1995 memoir “Silent Running,” Calvert described his experiences in submarine operations in the Pacific during World War II, chasing and sinking enemy ships.

Calvert was the commanding officer of the nuclear-powered USS Skate from December 1957 to September 1959. The submarine became the first to surface at the North Pole in February 1959. Calvert wrote about the experience in a book titled “Surface At The Pole.” The trip had been made to test how well a submarine could operate in the Arctic Ocean.

Battle said deciding when to surface through the Arctic ice was “a very tricky moment,” because it was unclear what kind of damage the move would cause the submarine.

“It was a very dramatic moment when he decided to pick the spot and go for it,” Battle said. “At the time, it was a major feat.”

Calvert served as the 46th Naval Academy superintendent from 1968 to 1972.

For all of his adventures and accomplishments at sea, Battle said he believes Calvert was even prouder of his work at the helm of the academy.

During his tenure, he put an emphasis on increasing the academy’s ability to recruit top civilian faculty members.

“He felt very strongly that the education of young men demanded balance, so he fought for civilian teachers and was very proud of that,” Battle said. “He was very proud of that legacy.”

He also implemented the academy’s academic majors program, which broadened the academy’s curriculum beyond engineering to include other majors such as political science.

Calvert also created the academy’s James Forrestal Lecture in 1970, which focuses on leadership and has been given by prominent political, athletic and military leaders, including former Secretary of State Henry Kissinger, football coach Dick Vermeil and Supreme Court Justice Antonin Scalia.

“He really was interested in the development of the minds of leaders,” Battle said.

After retiring from the Navy, Calvert worked as an assistant to the chairman of Texaco. He also was a senior executive at Combustion Engineering in Stamford, Conn.

Calvert is survived by his wife of 41 years, Peggy, and their four sons Craig, David, John and Kemp Battle. He also is survived by two sons, Jim and Charles, from his previous marriage to his first wife Nancy, who died in 1965.

Rich Robison

Secretary, U. S. Naval Academy Class of 1972

<< 

Admiral Calvert spoke directly to me only once, and I will never forget the experience. It was in September of 1969. At the completion of Summer Cruise that summer, I failed the Cruise Final Exam. I worked hard on that cruise, had the best notes and studied for the test…and I failed the exam. Upon close scrutiny of my answer sheet, it appeared that if you moved the answer grid down one notch, I then got most of the answers correct. It was apparent that I had left one of the answers out and that threw all of the other answers off by one. I knew the material, I should have passed.

Failing the Summer Cruise exam is a big deal at the Academy and I had to appear before the “Academic Board.” I waited in the passageway (hall) until they were ready for me, and then entered a room with a long table covered with a green felt table cloth. Sitting around the table were some eight Navy Captains, very senior naval officers…and sitting at the head of the table was Admiral Calvert.  There he was, the “Sup.” Talk about intimidation. I had no idea what was going to happen, and I knew that I could be dismissed from the Academy…my life’s dream could be ending right then and there.

I walked in and stood at attention at the far end of the table, my arms by my side along the seams of my trousers, my hands cupped. My eyes looked straight ahead. I was 20 years old and facing a Three Star Admiral who had my life in his hands.

Admiral Calvert then spoke directly to me:

“Mr. Klein, we have reviewed your case. It appears, as you have stated, that if you move the answer grid down one, the answers line up. You had a bad day. But we want you to know that you will have bad days during your life…and as a naval officer, on those bad days, you will still have to perform. It is our decision that you repeat your cruise next summer, with loss of summer leave.”

What that meant was the next summer I would have two cruises to complete, and no time off…this was the navy’s form of leniency…I could have been kicked out. I was relieved, I was being allowed to continue as a Midshipman.

Saul

Saul Klein

CEO, Point2 Technologies

http://Point2.com

This is probably of no interest to anyone but myself, but since I fly about 150,000 miles a year, I keep track of some of the details (I go through phases…I have been traveling extensively this since 1990)Take a look at the time to get from one place to another, today, October 31, 2008. I travel to and from Saskatoon from San Diego on average, twice a month. I am a “Registered Traveler” with http://FlyClear.com and this helps a lot in the airports where the program is available.

Departed Saskatoon on Time: 0647

Touchdown Denver Airport: 0847

Taxi and arrive at gate 43, Terminal A: 0855

Process pilots and flight attendant prior to allowing passengers to deplane.

Deplane: 0903

I try to sit in the bulkhead, front row for fast exit from the aircraft. I was first off the aircraft and walked quickly to customs, probably a good 5 minutes ahead of the second person off the airplane.

Cleared customs and walked to FlyClear station, went through the process, through security, put my shoes and jacket back on, packed up my laptop and down the stairs to the underground train.

Arrived at Train Entrance: 0913

Train from Terminal A to Terminal B, up escalator to Red Carpet Club near Gate 44…entered Red Carpet Club, up the escalator: 0921

So from landing to next flight, passing through customs and security at the Denver Airport: 34 minutes.

Saul

When I was in elementary school in Hawaii (Aliamanu Elementary School on Salt Lake Blvd and Pearl Harbor Kei in NHA 1), May 1 was a special day. Not special enough to warrant a full day off, but special enough for a morning of events and celebration. Lei Day Programs were conducted all over the Islands. Each grade would do a hula or a skit. There was always a Lei Queen and her court. These were the sixth graders. Part of the Court were the Kahili Bearers. I always wanted to be a Kahili Bearer but was not allowed to be one as my skin was not dark enough. Instead, in sixth grade, I danced to Houkilau.

Some of you may remember this song of May 1:

May Day is Lei Day in Hawaii

Garlands of flowers everywhere.

All of the colors in the rainbow,

Maidens with blossoms in their hair.

Flowers that mean we should be happy,

Throwing aside our load of cares,

Oh May Day is Lei Day in Hawaii,

Lei Day is happy day out here.

Saul

Saul Klein

President/CEO, InternetCrusade

http://InternetCrusade.com

CEO, Point2 Technologies

http://Point2.com

Have you visited RealTown.com recently? RealTown.com, the oldest, largest and most respected online community and network in the real estate industry has been totally redesigned and offers a wealth of information. Go to http://RealTown.com and check it out today!

Despite what you may read in the financial press, real estate has always been and continues to be, the IDEAL investment. The best real estate most of us will ever own is the real estate we bought yesterday (or last year, or ten years ago, or even longer ago). Everyone you talk to wants to own real estate. Few people will tell you they purchased more real estate than they should have. In fact, just the opposite is true. Most people will tell you that they wish they had purchased, and held on to, more real estate over their lifetime. The major drawback of real estate as an investment in years past has been its liquidity. For the most part, and particularly with technology and the Internet, that is no longer much of an issue. Properly priced property sells and real estate can be turned into cash should the need arise. The secret of course (not much of a secret), is not to be forced to sell but to sell when the market will yield the greatest return to you, the investor. "Buy low, sell high" is sage advice, but when it comes to real estate. "Buy, hold for a long time, sell" will almost always yield fantastic overall investment results.

Real Estate Investment Objectives:

Income - Real estate investments structured with enough down payment, will generate a positive cash flow. As time passes, in most markets, even a highly leveraged, negative cash flow property can turn into a positive cash flow investment.  

Depreciation - Theoretical Depreciation is the tax deduction one can use against the income real estate produces. Depreciation is a "non cash expenditure." Residential income property is usually depreciated over 27.5 years. Only the improvements are depreciable, not the land.

Equity Build-up - This results from the periodic pay down of the principal amount of the loan, usually through monthly payments on an amortized loan. Even if there is no appreciation over the life of the loan, the property owner would end up with a free and clear property at the end of the loan payment period on a fully amortized loan. This is usually a 30 year period on residential property.

Appreciation - While the amount of appreciation varies from market to market, real estate is a growth asset and often the largest part of the return on an investment in real estate is the equity gained through appreciation. Even small amounts of appreciation year after year can be considerable. Usually, the longer you hold on to a property, the better. The effect of appreciation is greatly magnified by the use of leverage.
   
Leverage - Through the use of borrowed money (OPM - Other People's Money), combined with a small amount of money of your own, you can control real property. The best leverage most of us can obtain in the stock market is 50%. In real estate, it is not unusual to obtain 80%, 90%, and even 100% leverage. With leverage usually comes risk, and with risk comes potential for investment reward.

In addition to the IDEAL as stated above, real estate investments have potential additional tax benefits - Investors are allowed to write-off (within income limitations) all operating expenses, interest on loans secured by the property, and property taxes. Also, Gain from the sale of real estate is treated as capital gain and investors also have the option of exchanging which, if done in accordance with the tax laws (IRC 1031), can result in partial to no recognized gain, which effects the immediate cash tax consequence.

What are you willing to pay today for a real estate investment to enjoy the IDEAL benefits outlined above? In other words, what is the "present worth of future benefits" to be derived from a real estate investment? We would refer to this as the value, and there are different types of value.

FAIR MARKET VALUE - The highest monetary price which a property would bring, if offered for sale for a reasonable period of time in a competitive market, to a seller who is willing but not compelled to sell, from a buyer, willing but not compelled to buy, both parties being fully informed of all the purposes to which the property is best adapted and is capable of being used.

Loan Value - Since a lenders security for a real estate loan is the sale of the real estate in the event of default on the loan, loan value is usually a conservative estimate of market value.

Value is determined three different ways, known as Approaches to Value by appraisers. The three Approaches to Value are the Market Data Approach, the Cost Approach, and the Income Approach.

Keep in mind that future income is impacted, positively or negatively by the "Four Great Forces" that influence value. Investors should be cognizant of these forces in the areas in which they own property or plan to own real estate. These "forces" will have an impact on the income which can be generated from any given property and the value of income producing property is directly related to the income the property produces.

The Forces Influencing Value are:

1. Physical Forces - the quality and convenience of schools, shopping centers, playgrounds, transportation systems, etc. It also includes the climatic conditions.

2. Social Forces - Population growth or decline; Marriage, divorce and birth rates; educational and religious standards.

3. Economic Forces - Business and real estate cycles, variations in directional growth, natural resources, wage levels, tax levels and insurance schedules.

4. Political Forces - Zoning, fire and police protection, government loan and other subsidy programs.

Value by the Numbers

1. Gross Multipliers - Value=GSI X GM

Does not take into consideration expenses.

2. The value of income producing property is directly related to the net income the property produces. The greater the net income, the greater the value. Net income can be increased by increasing gross income, by decreasing expenses, or a combination of both.

Income - Rent amounts are usually controlled by supply and demand

It is net income that we are most concerned with

Gross Scheduled Income

-Vacancy and Uncollectible Rent

Effective Gross Income

-Operating Expenses (Fixed and Variable)

Net Income

-Debt Service

Cash Flow

-Added Taxes

Net Spendable

Increases and decreases in income increase and decrease value.

If you can increase the net income by increasing rents or decreasing expenses, you increase the value.

Income = Rate X Value - You can use this as a comparison without understanding capitalization rate.

Changes in value based on changes in income.

3. Value by Tire Kicking

Cost per Unit

Unit Composition

Parking

Noise

Type of Roof

Individual Utility Meters

Size of Units

Seller Financing Assistance

Deferred Maintenance

Individual Water Heaters

Modern Kitchen

Orientation, Light or Dark

Price per Square Foot

Put on your tenants hat

What about assemblage and plottage

Rents and the Rental Market Place

You, as an investor, should be able to determine the dynamics of the rental market and in fact, should not purchase until you thoroughly acquainted with it.

Contract Rent - what is being paid under the existing rental agreements and for how long.

Economic Rent - what could be charged on the open market if the property were readily available.

Consider Rent as to:

Quantity - how much is collected

Quality - financial stability of the tenant. For commercial property, you can ask to see the financial statements of commercial tenants if the lease so provides. For residential income property, review the rental applications of tenants.

Durability - if the property is residential, you may be concerned if the term of the lease is for a prolonged period. If the property is commercial, industrial or office type, you want the lease term to be at least three to five years.

How do you determine market rents? You call. Do continuous rent surveys. Be up to date in your market area.

 
Saul

Saul Klein
President/CEO, InternetCrusade

Have you visited RealTown.com recently? One of the oldest, largest and most respected online communities in the real estate industry has been totally redesigned and offers a wealth of information. Go to http://RealTown.com and check it out today!

About 10 years ago I created a 100 page manuscript on the topic of personal financial planning and began to teach a two day program with the goal of helping the attendees create the framework of a personal financial plan and a check list to complete and implement it. The following is from that manuscript. Make 2008 your year to put your personal financial plan in place.

Financial Freedom by Saul Klein

Achieving Financial Freedom requires consistent review of one’s goals, objectives and priorities, and commitment to the accomplishment of those goals and objectives based on those priorities.

Defining your goals and objectives can be a difficult task. But doing so is critical. Without clearly defined goals, successful financial planning, and

the result of successful financial planning, Financial Freedom, is rarely possible.

General Personal and Financial Objectives:

Enhancing your net worth through financial strategies which are congruent with your personal goals and consistent with your attitudes toward investing

and tolerance for risk.

·         Protecting your accumulated assets from erosion caused by inflation.

·         Optimizing your cash flow over the planning period.

·         Preventing loss of capital by minimizing risk.

·         To maintain a comfortable standard of living (or exceptional standard of living) for yourself and family.

·         Achieving a better understanding of individual financial planning.

·         Maintaining sufficient liquidity to respond to unforeseen emergencies, or opportunities.

·         Coordinating and effectively manage your financial affairs.

Cash Management Objectives:

·         Increase funds available for investment and lifestyle through more effective cash management.

·         Simplify your system of managing your cash.

·         Maximize the return on your cash accounts.

Tax Planning Objectives

·         Reduce your personal income tax liability.

·         Understand the remaining few tax-advantaged investments.

·         Manage your tax records more effectively.

Investment Management Objectives:

·         Optimize the return on your invested capital consistent with your tolerance for risk.

·         Establish a balanced, diversified investment portfolio.

·         Understand the use of leverage and determine your appropriate level of debt.

Risk Management Objectives:

Evaluate the appropriateness and cost effectiveness of your current insurance coverage Life

·         Disability

·         Casualty

·         Medical)

·         Business

·         Errors and Omission

Specific Funding Objectives:

·         Accumulate adequate assets to provide you and your family a comfortable retirement, without disabling loss of purchasing power during your "golden

years".

·         Provide funds for a quality education for your children.

Estate Planning Objectives:

·         Minimize estate and inheritance tax.

·         Allow for the orderly and efficient distribution of your assets in accordance with your wishes.

·         Reduce the burden of estate management for your heirs.

Although these are separate and distinct objectives, they are not mutually exclusive. By viewing all areas of your finances as a comprehensive whole,

taking into account all the interrelationships among all the financial issues you face, you control the financial events in your life rather than

the other way around.

Financial Planning is:

·         Bringing the future into the present so you can do something about it today

·         A philosophy

·         A state of mind

·         It is not a destination, it is a road. (The road to success is always under construction)

·         It is a continuous effort of research, education, and self-motivation.

·         It is continuously reviewing objectives, weighing alternatives, and making choices.

Saul

Saul Klein e-PRO/GRI

Certified Financial Planner (CFP)

President/CEO, InternetCrusade

1993 President, San Diego Association of REALTORS

1999 REALTOR of the Year

Sign up for e-PRO: http://www.eProNAR.com

(619) 283-7302 Fax: (619) 283-7343 MailTo:Saul@InternetCrusade.com