Dessauer Group

I read one of my favorite blogs (Red Head Writing – She is a hilarious!) this week and it got me to think about its topic. Gut Feel. This is a natural instinct that everyone has, but hardly anyone uses consistently. In business, it is your best weapon.

In my entrepreneurial career, I have created and continue to create many companies. Some have worked out great, others have struggled, and some are just so-so. I believe it is your gut feel that not only creates a good business, but also its level of so-called success. Deals and businesses sometimes are too good to be true.

Donald Trump said, “Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you’re generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don’t make.” To me that means three things. 1) Listen to your gut. 2) Stick with what you know. If you don’t know it, learn it before making a decision. 3) Its o.k. to say no in business (and in life).

I have had a gut feel about people I have gone into business with and every time it turns out to be the correct feeling (good and bad). It’s how you communicate with your gut that makes the most difference. It’s actually when you ignore that gut feeling, is when you should be relying on it most.

When we ignore our gut feelings we ignore the primal instincts that we have as a species. Think about your history with gut feelings. Gut feelings about a job, partner (personal and business), or a business idea. You were usually right. I am learning to use my gut feel more. Here is what I would suggest:

Remove your head and heart when making decisions in business. I went to a pretty good business school for college. They would have never said not to use your head when making decisions. In the real world however, your gut instincts have more power than you think. They will not only keep you safe, but also make you money. Go with Your Gut and your head and heart will follow!

Your truest gut feel comes to you among tranquility. If you need to discover your gut feel about something in business, go to a quiet space. I love to go to my quiet space to think clearly. I also think that meditation brings out the best in gut feels. Learn to recognize the gut feel as your inner voice.

Always pay homage to your bad decisions. When you make a bad decision, you always say things like “I knew it!” or “I had a bad feeling about this!” Try to review all of the bad business decisions you have made and how you communicated to yourself afterward. That communication should echo how important it is to listen to your gut in business.

You already have this business skill. Great news! You already possess the skills necessary for this. You do not have to invest in any products or schools. This is something that we have been evolving with since we started to exist on the planet. Use it!

If you start to implement these ideas in your business, you can have an instant mentor that looks out for your every move. It may take some practice, but in time you can get pretty good at not only making decisions, but also making them on the fly. This can be critical to your success!

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it!” – John Dessauer

If you have been with me at all during the last year and a half, you know that I have been on a simplification and minimization lifestyle change. You might also be aware that self-challenge has been very much a part of that process. As a matter of fact, my wife and I have taken the challenge thing to the next level. We challenge ourselves every month.

Please take a look at The Need to Be Challenged for more information. Anyway, I wanted to talk about our latest challenge that we did in May. For the whole month we decided to go down to one vehicle. That’s right, one vehicle between my wife and I! With our extremely busy lifestyle, this was quite the challenge.

We had to consider exactly how to do this with such things like family, social life, and being entrepreneurs. To say the least, scheduling our lives for those 30 days, was quite interesting. Not only did we make it through the 30 days with flying colors, I learned some valuable lessons. Here is some of what I learned:

1.    Simplicity Wins Over Complexity All the Time – By going down to one vehicle for the month and simplifying our lives, the benefits became enormous. You would think that by adding another vehicle it would simplify your life, but unfortunately it works the other way around. When there is only one option for transportation, you simply make it work!
2.    One Family Vehicle Keeps Families Closer – One of the benefits of the challenge was the amount of time I could spend with Heather. Today’s society seems to create everything in a manner that actually keeps important people away from spending time together. The hustle and bustle lifestyle of most American’s is not healthy for relationships. As we would have to plan out our days, we decided to accomplish a lot of tasks together. Who knew one vehicle could produce quality time in a relationship!
3.    One Car Saves a Lot of Money! – Have you seen gas prices lately? Here in the Chicagoland area, we still pay among the highest in the nation. One vehicle seems to save money by being more aware of routes that might be easier on gas or by combining our trips we often save gas by taking care of several stops together.  You can reduce gas prices, but also wear and tear, oil changes, car washes, and insurance.  By the way, you can’t imagine how many trips may be unnecessary, such as shopping and eating out.
4.    It is Better for the Planet – I’m not the average tree hugger. However, I do believe it is wasteful to utilize assets when they are not needed. I believe we waste so much in this country. I think we can make some positive changes for our planet by simplifying things, such as going down to one vehicle.
5.    The One Car Challenge was Fun – It was very interesting to accomplish this challenge. I’m not quite sure if we would do it permanently, but we are seriously considering it. It provided even more of a reason for critical thinking between Heather and I regarding exactly how we were going to get through the challenge.
6.    Other People Can’t Understand Challenges – I had to add this as my last point. As we would talk about our challenge to other people, we often would get weird looks or comments like “Oh, we could never do that!” OR “Are you guys crazy?” You have to be up for the challenge to understand. Being different is a little scary for people. For those of you that know me, that’s where I’m most comfortable!

This is a great challenge for the entrepreneur. Simplicity, relationships, saving money, doing the right thing, and being different are all traits of a good entrepreneur. Make sure you try this challenge to strengthen your skill set.

In closing, challenges are a great way to stretch yourself. You can’t expect to expand your mind if you only deal with what you know. Challenges may eventually become a lifestyle for you, which is very exciting!

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you want to make it!” – John Dessauer

The last couple of weeks have reminded me of the great variety of life we have here on this planet. As a species, we often battle challenges from all kinds of fronts. As a counterweight, life also gives us euphoric sensations that are just as powerful.

I have experienced those over the last month, and have gained a further appreciation of life and why we must enjoy the journey and forget about the destination. The destination is just a place that you go, but the journey is the thrill ride that you will never forget!

Here is a list of some of those events that created my journey just in the last month  for me:

1.    The birth of my new nephew.
2.    My wife receiving her Bachelor’s Degree from Indiana University. (Graduated with High Distinction )
3.    My oldest daughter completing her first year of college (Indiana University)
4.    Closing on some property deals and paying off debt.
5.    Creating a new company for our new Florida Property holdings.
6.    Planning the Edutainment Events for 2011 with my friends Mark Kohler and Del Hargis.
7.    Experiencing the Indianapolis 500 Live!
8.    Having my quad tendon rupture and having emergency surgery.
9.    Completing yet another one of our family challenges. (One Car for a Month on Purpose!)
10.    Hearing of the death of two friends of mine in a plane crash (Justin Yates and Chad Wade)

As I have thought about the turbulence of life, I have realized that the degree of turbulence dictates how alive you really are. Life always has a way of providing balance. It is up to us to be able to accept it, or not. When one door closes, another door opens up.

The highs and lows need to remind us of our being alive. The idea that life is supposed to be all roses all the time, would make a very boring and almost plastic life that would be worthless. Fortunately, that is not the case with what we have. Try to identify the balance that life brings when you see tragedy. In the case of my friends, Chad Wade and Justin Yates passing, here is how I see the balance.

The depth of their tragic death can only be measured by the heights to which they helped people grow and succeed. I know this because I was able to witness thousands of people to whom they made their lives better. I think for all of us, we need to make sure that we bring appreciation into our lives. In other words, instead of dwelling on the tragedies of life, we need to consider the blessings.

I do know one thing, tragedies in life, will never leave us. It’s not the tragedies in life that take from us, it’s the blessings in life that nourish us. From every tragedy, blessings appear, like a rainbow after a rainstorm. There is a rainbow out there right now because of Chad and Justin, and if you look hard enough, you will find the pot of gold too! Thank you for providing these blessings!

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you want to make it!” – John Dessauer

Life’s most underestimated item is decisions. The decisions we make shape every aspect of our life. Yet, most of the time, we make decisions on a whim, without fully thinking out the repercussions. Decisions are key to overcoming most obstacles.

There are certainly many professional definitions as to what a decision is. It is no doubt a process. A process that one might go through when contemplating life’s most complex issues or deciding what to eat for lunch. Either way, a decision is an important action of our everyday lives. Decisions also play an enormous role in business.

One thing I like about the word is that it comes from the root meaning in latin, “to cut off”, meaning elimination of all other options. Once you make a decision, you need to stand behind it. That I believe is easier said than done in some cases.

Decisions can be irrational or rational. To the decision maker all decisions seem to be rational at the time it’s made. It is only in retrospect that decisions that we have made become irrational by their results. Because of that, most people sometimes have trouble in making decisions. I wanted to outline a seven-step process to help you with tough, major decisions.

Here it is:

1.    Understand what you want as your intended results: Think through a decision as to what the probable outcome will be. Make sure you take any extra steps to make the decision go your way as much as possible.
2.    Collect Information regarding the topic: Make sure you do a little research to identify as much information as possible about the decision and its outcome.
3.    Mastermind with your Closest Confidants: If you don’t have close people to run the decision by, get some! Getting perspective other than your own is invaluable.
4.    List the Benefits and Drawbacks of your decision: Keep the list to no more than five of each. This way you can see the product of your decision could be. Make sure you weigh out each.
5.    Execute the Decision: Make the decision and “cut off” any other options.
6.    Immediately Take the Action that the Decision Prompts: Don’t wait once the decision has been made. Take action immediately to make the decision work to your favor.
7.    Adapt: Learn from the Decision that was made. If you made a mistake, who cares! Life is full of bad decisions, it’s part of the learning process.

The only other thing that I want to mention here about decisions, is the fact that indecision is also a decision! Live life on purpose!

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you want to make it!” – John Dessauer

In my career, I have had a lot of opportunity to put together partnerships in real estate. (Some good, some bad.) I have made mistakes, and I have done a lot of things right. Here are some things that I have learned:

My first item is to make sure that you understand the importance of entering into a partnership slowly. Make sure you examine the talents, skills, and resources of your partners. Make sure you also know what your partners will do in times of challenge.

Other times partners have nothing to contribute, all while you’re putting in the majority of the work. Be careful of this, because you can overwork your side of the partnership.  This may convey to the other partner(s) that they do not have to do much.

Because of the above items, please make sure that you have your partnership agreements in writing from the start of the relationship. In the agreement, make sure you spell out how each partner is to contribute financially. I would also make sure that you highlight any time commitments that are needed. Remember, time on a project can be more valuable than money.

Try to have regular meetings to over the budgets and books. Call it a Monthly Budget and Book Meeting. If you fail to meet regularly, projects can spiral into an uncontrollable mess. It’s very hard to go back and straighten things out once the runaway train is rolling.

Make the partnership more than just money. Partnerships are a great way to grow personally and professionally. See if there are any other things you can pull from the partnership that will make you a better investor. Things like specialized knowledge, professional relationships, or problem solving skills.

In putting a partnership together see what items you can bring to the table that will make you a major contributing segment of the partnership. Here are ten ideas of what you can bring:

1.    Capital
2.    Balance Sheet/Financial Statement
3.    Reputation
4.    Skills
5.    Experience
6.    Network
7.    Time/Attention
8.    Willingness to Travel
9.    Leadership
10.    The Deal Itself
Finally, I think it helps to put specific objectives in the agreement that you will be seeking in your new partnership, project or deal. Make sure that they are spelled out in a clear, concise level. It very well may make the difference in whether you have partnership success or not.

If you follow these tips you should have an easier time in formulating your partnerships, and achieving your goals. The idea is to use leverage, not to stress yourself out.

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is a simple as you make it!” – John Dessauer

One thing I learned in watching the last minute cooperation by our leaders to avoid a government shutdown, is that cutting habitual spending is not easy. It is something however, given our current fiscal situation, has to be done.  To have any chance at global financial survival, and to not choke off future generations by massive debt, immediate, tough, frugal decisions have to be made. Some European countries have called this austerity.

This austerity will start to take place in American lives through state and Federal government spending cuts. Habitual spending is a tough thing to shake. As most of you know, throughout 2010 and 2011, Heather and I have been going through our personal simplification process. Part of that process is to curb our spending. It has been a very tough, but also rewarding experience. You start to take an inventory of what you want and what you need. Its funny, you realize you actually don’t need as much stuff as you want.

Although we have another eight months until we get through the process, our lives have become lighter and easier to manage. As I say when I teach, what starts out difficult gets easier, and what starts out easy, often gets more difficult. The more we simplify, the easier the process seems to get.  We have to start that process now with our Federal Government and its spending habits. It will be difficult at first, but as it progresses, it will get easier. I have noticed that this coincides well with investing in real estate.

You have to be very frugal in today’s real estate market. Understand what is coming and you will be able to make intelligent decisions as to what to invest in. Many of you know I have been bullish on apartment investing. I continue to be, because of the wave of inflation that is hitting us. Rental real estate is a nice hedge against inflation. As the cost of goods and services go up, so do rents.

The almost Government shutdown has taught me to stay ahead of the curve with regard to expenses. We must remove unnecessary expenses now to make room for what will be going up in the coming months and years. They are:

1.    Goods and Services – Everything is going up in price. From consumables to Insurance.
2.    Taxes – Taxes will undoubtedly go up to start to pay for our massive debt.
3.    Fuel – Higher gas prices will be here for a while, maybe even permanently.
4.    Interest Rates – To curb inflation, expect the Fed to start raising interest rates. (Maybe even at the end of this month, let’s see how good I am at this stuff?)

If you are not making room currently, you will simply run out of room. If I am way off base here, then I will apologize. Unfortunately, I don’t think I am. By making room, either way, you and your investing will be much more efficient.

The trick is not only to strive to make more money, but spending less will prepare you for what is about to happen to our economic system. Make sure that you are investing in things that make sense. Fix and flips for instance are and will be out of vogue. Cash flowing techniques, such as long term rentals, will be where the survival money will be. Become a thousandaire. A few thousand dollars from your rentals changes the economic situation for most people.

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it!” – John Dessauer

In my quest to get my third book done, The Twist; When Life Gives You Lemons… I thought I would give you a little peek into the subject of one of the chapters.  It’s about How to Overcome Any Challenge! I wanted to give you my thoughts in overcoming challenges that come your way everyday!  Here are some simple solutions that help me in this journey we call life:

Put Yourself in a Mental Lockbox: (I risk sounding a little out there,  but here goes!) I once dreamt about being shot into outer space into an asteroid field. I imagined myself in a “lockbox” of safety. I use that lockbox today as my mental safe room.  The lockbox is made with the toughest, strongest material made in the universe. Inside, I have all of my most valued possessions (family, pets, personal possessions, etc.) Inside is a world of comfort, peace, quiet.

I have rule, in the lockbox, it is impossible to be hurt by anything or anyone. Because of the treacherous world outside the lockbox, I sometimes stay in the comfort of my environment until I can calm down. Why? That’s where I devise my plans to overcome whatever challenges I am faced with.

Separating yourself mentally from your challenges is like mentally going on a vacation. I have three such spots that I escape mentally to. One is the lockbox, the other is a particular golf course that I play, and finally I go to my favorite place, Key West, Florida.

Task: Find three mental vacations for yourself. It can be a “mental lockbox” or certain places you like to go. While you are there, devise solutions for your particular issue or challenge. Start to practice by finding a quiet area and sending yourself to your spot, mentally. You don’t need to stay there long. You might even just need to go there for a minute or two. But be productive when you’re there. You see that not only does the stress start to melt away, but also it provides the resources you need to kick the challenge to the curb in order to move on to better things.

Challenges Define Life: If you measure the highs and lows in life, proportionately, their distances are the same. Remember, life is like real estate, the stock market, and winning seasons of your favorite baseball team. It does not continually go up (Insert Joke…I’m a Cubs fan).  It’s the challenges or hurdles in life that define life. These are  what propels us to evolve into a stronger species.

Take your challenges and turn them into a new resource of energy for life! Mark Twain once said: “Oh Death where is thy sting! It has none. But life has.” We have to understand having challenges, means we are alive! We often take life for grated and only try to recognize and celebrate the success, joys and good times. But its only when we confront the challenges and problems that are character is defined.

Truth is, it’s not that life is so short, it’s that death is so long. Our time here is short, the sooner you can embrace challenge and understand how it defines your life, then you can really start to live! The greatest tragedy in life is not death, but what dies in us while we are living.

Task: Pick three challenges in your life and give examples of how they have made your life more productive and enjoyable.

You Are Not Alone: Everyone has challenges and problems. Some try to hide it more than others. Take solitude in the idea that we are all trying to solve problems daily. We fail all of the time. We all go through financial hardships, sickness and even death. In the end, this is why we become better. Check out this quote from one of my favorite athletes on the planet:  “I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” – Michael Jordan

You also should recognize the fact that you probably have people that will support you in getting through your challenges or issues. Look to your closest confidants. For me, it’s my wife Heather; she is the best at giving me alternative points of view. When I sign my The Alchemy of Wealth books for people, I write “change the way you view things and the things you view, change!” It is so true! (My thanks to Heather for helping me do that everyday!)

Task: Take a moment to recognize the people in your life that you should be using as a support mechanism for your issues, or the challenges you face. Who knows, they may depend on you to help them through their issues. That in it self may be the very thing that will help you through yours!

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you want to make it!” – John Dessauer

(This blog is actually a letter that was sent to one of my subscribers. I have left it in its original form. It moved me so much that I wanted to share it with you. Please notice the many lessons presented in it and I’m sure it will bring as much joy and admiration for the human spirit and particularly, the people of Japan. My thoughts are continually with them. – Johnny D.)

I want to thank you so very much for your concern for me. I am very touched. I also wish to apologize for a generic message to you all. But it seems the best way at the moment to get my message to you.
Things here in Sendai have been rather surreal. But I am very blessed to have wonderful friends who are helping me a lot. Since my shack is even more worthy of that name, I am now staying at a friend’s home. We share supplies like water, food and a kerosene heater. We sleep lined up in one room, eat by candlelight, share stories. It is warm, friendly, and beautiful.  During the day we help each other clean up the mess in our homes. People sit in their cars, looking at news on their navigation screens, or line up to get drinking water when a source is open. If someone has water running in their home, they put out sign so people can come to fill up their jugs and buckets. Utterly amazingly where I am there has been no looting, no pushing in lines. People leave their front door open, as it is safer when an earthquake strikes. People keep saying, “Oh, this is how it used to be in the old days when everyone helped one another.” Quakes keep coming. Last night they struck about every 15 minutes. Sirens are constant and helicopters pass overhead often. We got water for a few hours in our homes last night, and now it is for half a day. Electricity came on this afternoon. Gas has not yet come on. But all of this is by area. Some people have these things, others do not. No one has washed for several days. We feel grubby, but there are so much more important concerns than that for us now. I love this peeling away of non-essentials. Living fully on the level of instinct, of intuition, of caring, of what is needed for survival, not just of me, but of the entire group. There are strange parallel universes happening. Houses a mess in some places, yet then a house with futons or laundry out drying in the sun. People lining up for water and food, and yet a few people out walking their dogs. All happening at the same time. Other unexpected touches of beauty are first, the silence at night. No cars. No one out on the streets. And the heavens at night are scattered with stars. I usually can see about two, but now the whole sky is filled. The mountains are Sendai are solid and with the crisp air we can see them silhouetted against the sky magnificently. And the Japanese themselves are so wonderful. I come back to my shack to check on it each day, now to send this e-mail since the electricity is on, and I find food and water left in my entranceway. I have no idea from whom, but it is there. Old men in green hats go from door to door checking to see if everyone is OK. People talk to complete strangers asking if they need help. I see no signs of fear. Resignation, yes, but fear or panic, no. They tell us we can expect aftershocks, and even other major quakes, for another month or more. And we are getting constant tremors, rolls, shaking, rumbling. I am blessed in that I live in a part of Sendai that is a bit elevated, a bit more solid than other parts. So, so far this area is better off than others.
Last night my friend’s husband came in from the country, bringing food and water. Blessed again. Somehow at this time I realize from direct experience that there is indeed an enormous Cosmic evolutionary step that is occurring all over the world right at this moment. And somehow as I experience the events happening now in Japan, I can feel my heart opening very wide. My brother asked me if I felt so small because of all that is happening. I don’t. Rather, I feel as part of something happening that much larger than myself. This wave of birthing (worldwide) is hard, and yet magnificent.
Thank you again for your care and Love of me,

With Love in return, to you all,
Anne

I get this question all of the time. I always have to revert back to Albert Einstein. I know what your thinking? Albert Einstein and real estate investing? What is this guy talking about? Well stay with me…

Cap Rate is a relative term based on where you are and what you are investing in. In other words, it changes depending on where you are and what type of asset class you are looking at (apartments, storage units, office buildings, retail, etc.). There is really no specific cap rate that is good or bad. Instead the question, what is a good cap rate, you need to ask is: What is a good cap rate on the South side of Chicago for Apartments.

Cap rate, which by the way, stands for capitalization rate is the barometer that gives the investor the understanding of value of a certain asset class, in a certain area. It is really no different than how we as Americans shop for other items in stores. When we look at the price tag of an item at the store, we immediately make the decision of whether or not it is of value based on where we are shopping. Cap rate allows us to do the same thing with real estate.

Typically, cap rate is only used for commercial properties. Non-commercial properties (residential) usually use another form of valuation called the sales comparison method. When you use cap rate you are basically concerned with two things. One, what is the Net Operating Income of the property? Two, what is the sales price? Cap rate shows the relationship between both of those two items.

If you take the sales price and divide it into the net operating income, you will get what the cap rate is. Now, that is the cap rate of the deal (price tag), you still have to figure out what the cap rate of the area is (where you are shopping). A market cap rate is an important step you want to make sure you understand. The three ways you can easily find a market cap rate are:

1.    Do research online.
2.    Talk to a good commercial real estate agent or Broker.
3.    Talk to a commercial Appraiser.

So a little higher cap rate on a property than the market that it is in, means that you are probably on the right side of a deal. A deal that has a cap rate lower than that of the area that it’s in, could indicate that you could be paying too much. Make sure you have adequate figures and the information of how the asset got priced.

One last thing, you don’t want to always go after extremely high cap rate compared to an area. It is usually is an indication of unstable income. Something is causing the unstable income and for the novice investor it could be disastrous! Make sure you do proper due diligence before buying that type of property.

If you remember some of the things that we discussed here with regard to cap rate, you can do quite well. It could make the difference with what level of success you obtain. Heck, even Albert Einstein could have been a good real estate investor with this information if he wasn’t trying to figure out how the universe worked!

“Remember…wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you want to make it!” – John Dessauer

An apartment building is typically built by builders and/or developers. The challenge with that is the fact that builders typically build buildings with little regard as to the demographics of the area. This in my opinion, has been a big mistake. It’s the very reason why some apartment buildings have gone as “non-performing” in metro areas that have been built fairly recently.

Anyone looking to build an apartment building has to look at the apartments from an investors point of view. The builder should be considerate of four major things. They are:

1.    Growth and Development of an Area – How the employment outlook is in an area is a key component in the supply and demand model that apartment buildings thrive on. Apartment buildings should not be built in an area where there is long-term stagnant growth. The management of the apartment building in a no growth area will have higher expenses than normal in attracting and maintaining tenants. Because of this, the Net Operating Income of the building will suffer, hence continually losing value. Only build in areas of strong long-term growth.

2.    Competition – What is the competition in the area with apartments? What type of       amenities are most desired in the area? Builders often flood an area with Class A apartment buildings when the real need is in the Class B range. Take a look at the demographics of an area along with information about income levels, rents, occupancy rates, and housing market stats. The builder needs to understand if the market is flooded with apartments in general or even a particular style. In other words, if the need is for entry level apartments is greater than that of luxury apartments, then that’s what should be built.

3.    Occupancy/Vacancy – When occupancy rates are on the rise, it is an indication that rental units are in demand. Builders should have a plan to build particular models that are needed within a market. When builders fill that need, investors are usually there to purchase the newly constructed buildings and get them occupied. This is call absorption within a market. When Vacancies are high, absorption with new units entering the market happens at a snails pace.

4.    Rents – This is the final thing a builder needs to look at. If the average rents are $800/month for a 2 bedroom unit in a given market  building the builder should work backwards from those numbers. The builder should annualize the income from the building and apply the appropriate vacancy rate in the area. He then should consider about 45% of the gross income goes to expenses. Once you have your income and expenses you can now understand what the Net Operating Income is. From there you can figure value. If value is obtained, then the builder can then budget how the construction and development cost compare to real market value. The builder can then figure the margin from the sale of the newly constructed building and repeat the process.

An apartment builder that keeps these points in mind, should be very busy in the coming years. Currently, supply is stagnant at best. Demand will be increasing from the Echo Boom generation. Echo Boomers will completely change the multi-family industry, according to a recent report by the Harvard Joint Center for Housing Studies. In the next 10 years, Echo Boomers will create more than 2 million households from the ages of 24-35 years of age. That particular segment of the market place is dominated by renters.

Builders taking notice to the ideas presented here are going to be able to create a long, sustainable career in building apartments. Adding units to a market where apartments  can’t keep up with demand is gong to keep builders busy for a while. Done right, builders should be smiling all the way to the bank.

“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you want to make it.” – John Dessauer