The EnRICHer - January 2012

Newsletter of The Realty Investment Club of Houston January 2012

WWW.RICHCLUB.ORG

SELF STORAGE INVESTINGIntroduction to Self Storage

By Scott Meyers, CSSM©

Self storage facilities are realproperty designed to be used for

the purpose of renting or leasingindividual storage spaces to tenantswho can access such a space for thepurpose of storing and removing per-sonal property. They offer rentals ona month-to-month basis of individualspaces, where customers providetheir own lock and have sole accessto their space. Today’s typical stor-age facility may be comprised ofseveral one or two-story buildings ontwo to six acres of land, or a multi-ple-story building, containing a care-fully-designed mixed unit of spaces.The units typically range in size

from 5X5 to 10X30 feet with 30,000to 120,000 total rentable square feetof space. Self storage facilities fre-quently feature large roll-up doorsand drive-up access to outside spaces, and offer outsideparking for storage of boats and recreational vehicles,which often can’t be stored in residential communities.Today’s facilities normally have the following features:• 10,000 to 100,000 rentable sq. ft.• A wide range of unit sizes• Well lighted• Paved vs. graveled

• Storage units divided by movablesteel panels• Some or all of their spaces climatecontrolled• High-tech security systems,including electronic-access, cam-eras, and digital video recording.• Perimeters that are walled orfenced with security gates• May or may not have a residentmanager• Single or multi-story buildings• Provided carts and dollies for useby its customers• May contain movable storagemodules• Sale of storage and moving relatedsupplies• Provide ancillary retail servicesand products.

From the real estate perspective, self storage:• Meets the needs of several consumer groups (residential& commercial)• Uses simplified structures• Makes efficient use of land, especially odd shapedparcels in less desirable locations• Has short construction time, thereby providing little

Continued on page 14

www.RICHclub.org2 • JANUARY 2012

THE ENRICHER © 2010 by The Realty Investment Club of Houston (RICH), a non-profit tradeassociation. Published monthly by RICH and included in the membership package. Quotations andreprints are permitted with full credit given to the author, plus “The Enricher: Newsletter of theRealty Investment Club of Houston.” Subscriptions $79 per year; included with membership.

MEMBERSHIPTwelve month individual membership is $257; family membership $297.

THE ENRICHER STAFFEditor: [email protected] Advertising ([email protected])GraphicDesign: Terrance Johnson, Uptown DesignAgency (713) 922-0323 ([email protected])

Articles must be received by the 1st of the month two months prior to issue date to be consideredfor publication. To be considered for a specific issue, it is recommended you contact the Editor atleast three months prior to issue date. All submissions are at the discretion of the Editor and aresubject to editing.Advertising space deadline is the 1st of the month one month prior to publication. All camera-ready artwork and materials for non-camera-ready ads are due by that date.

EXECUTIVE BOARD

President, Laurie Ward; [email protected]

Vice President, Ray Sasser; [email protected]

Treasurer, Steven Kaufman, CPA; [email protected]

Secretary, D.A. Rambo; [email protected]

DIRECTORS

Education, Belinda Lopez; [email protected]

Governmental Affairs, David L. Smitherman; [email protected]

Member Services, Nick Fox; [email protected]

Promotion, Charles Chin; [email protected]

Volunteer Services, Leo Muscarello; [email protected]

Workshops, Derrel Sims; [email protected]

RICH STAFF

Executive Director, Randy Steadham; [email protected]

Member Coordinator, Roshan Bhatt; [email protected]

PAST PRESIDENTSWayne Ritter George Yeiter Jon Kubas James Robert Smith Charlie Adams Jr.Gopy Swamy Judy Cook Joseph DiPietro Randy Steadham Linda Muscarello

The information contained herein is believed to be accurate; however, it is not guaranteed or war-ranted in any manner and is subject to change without notice. Writers’ and speakers’ opinions arenot necessarily those of RICH. You are advised to seek professional advice.

CODE OF ETHICSRICH members are expected to be civic minded and willing to operate with high standards of honesty and integrity. It is our duty to conductourselves with the highest principles of the free enterprise system. We wish RICH to be synonymous with competency and fairness. As RICHmembers, we hereby bind ourselves to this code of ethics:

1. We shall not discriminate against any person with regard to race, color, religion, age, national origin, sex, handicap or familial status asdefined by current Texas law.2. We shall recognize that real estate is a service related industry.3. We shall refrain from engaging in any illegal practices, or defrauding any member, customer or associate, with the aim of always con-ducting business in a professional manner.4. We shall endeavor to stay informed and updated on matters affecting housing in our communities, and adhere to local, state and federallaws.5. We are individually responsible for our own due diligence and continuing education. Members are expected to verify any and all assump-tions regarding business decisions to prevent falling victim to fraud, misrepresentations and illegal practices.

Further, if any allegations of conduct considered detrimental to the purposes and interests of RICH are received in a written and signed com-munication to the Board of Directors, the Executive Committee will consider the matter. Should a decision to take further action be made,the Secretary shall furnish a copy of said allegation(s) to the accused, who shall be given adequate time to reply. Thereafter, the Board ofDirectors shall take such further action as it deems proper and in accordance with the bylaws.

January 2012 VOL. 32 NO. 12

The Realty Investment Club of Houston(RICH), a non-profit trade association, isone of the largest real estate investorgroups in the country. RICH membersconsist of full- and part-time investors,

beginning investors, real estate brokers andagents, attorneys, contractors, accountants,property managers, renovation specialists,appraisers, bankers---people who want to

enjoy the many benefits ofreal estate investing.

RICH was established in 1979 andpromotes networking and educationalopportunities to its membership.

MISSION STATEMENTTo serve real estate investors

through education, networking, andadvocacy while promoting sound,

ethical business practices.

BADGE POLICYAll members of The Realty Investment Clubof Houston and guests must wear a namebadge to all General Meetings, Focus GroupMeetings andWorkshops. There will be no

exceptions to this rule.

The Realty Investment Clubof Houston

6611 Portwest Drive,Suite 100,

Houston, Tx. 77024(713) 947-RICH(7424)FAX: (866) 909-8794www.RICHclub.org

THE REALTY INVESTMENT CLUB OFHOUSTON IS A MEMBER OF THE NATIONALREAL ESTATE INVESTORS ASSOCIATION

Join, Learn, Grow

®

JANUARY 2012 • 3www.RICHclub.org

A MESSAGE FROM THE PRESIDENT

Here we are at the beginning of a new year again. Timeto reflect on our past accomplishments and prepare for

our future.If you missed our General Meeting in December you

missed an eye opening report given by Lindsey Younts ofEconohomes. Some highlights of Lindsey’s NationalHousing Outlook were as follows:31% of homes sold in quarters 1 thru 3 of 2011 were

either distressed, wholesale, fore-closures or REO (real estateowned by banks)On average homes sold at a

27% discount35% were financed thru FHA

while 40% were investor dealspaid by cash or hard moneyEven though interest rates are

low and Houston has not seen thedownturn in housing that manyother states have seen, lendershave tightened their guidelines in our area as well. This is anopportunity for us as real estate investors because alternativecapital will be coming into play more and more. It is evenmore important now than ever to be a member of RICH togain insight into our ever changing market place.If you have not been to one of our General Meetings in

awhile, why not start the New Year out at our meeting on

January the 7th. Renew your commitment to real estateinvesting in 2012. Everyone gets something at the meetings.That “something” may just be one piece of informationwhich could save you money, time, or help make your nextdeal possible. If you receive nothing but an extra shot ofenthusiasm for real estate investing—- then it’s worth theeffort.On behalf of RICH, I wish you a successful new year

filled with lots of real estate deals.

Happy Investing,

Laurie Ward, PresidentThe Realty Investment Club of Houston

JOIN, LEARN, GROW

MEMBER BENEFITSORIENTATION

Stop throwing money away! RICH membersreceive special discount prices from numerousnational and local vendors – so many that your sav-ings could be more than your dues! Come learnabout these savings and about the many meetingsand classes offered by RICH.Member Benefits orientations

are routinely held at RICHheadquarters on the sec-ond Thursday, from6:30pm – 9pm, immedi-ately following the“Introduction to RealEstate InvestingSeminar.”Check the website,

www.RICHclub.org, forthe latest information.

BYOLTO RICHA new networking event is planned for the3rd Tuesday of the month at RICHheadquarters, BYOL. This is open tomembers and you can bring a guest. BOYLis short for Bring Your Own Lunch. Softdrinks will be provided. We are hopingthat this gives you another opportunity tonetwork with your peers in a casualsetting. There may or may not be a shortprogram, details will be determined on alunch-by-lunch basis.If you are in the Galleria area, pleasepick-up lunch and join us the third Tuesdayof the month. Please send any commentsor questions to Charles Chin, 281-300-1515


10WAYSTO FIND OWNERSOFVACANT PROPERTY

by Joseph M. Kaiser

It happens all the time. I’m driving down a road Ihaven’t been on in months, turn the corner

and BOOM. There it is—a vacant house.Hmmmmm....this could be interesting,but I’ll need to do a little checkingbefore getting my hopes up.My first stop is the tax assessor’s

office to determine who owns thatproperty.With an owner’s name, I canhead over to the recorder’s office andfigure out what they owe on the thing.Sometimes, it’s easy. Here’s a deed,there’s a mortgage, and that’s it.Other times, it isn’t quite that simple.

There may be a bunch of documents to wadethrough. But that’s okay, it’s my job. If it takesan hour, I spend an hour. I know if it leads me toa bargain deal, it will be time well spent.Once I’ve got a pretty good idea of what’s

owed, I take a long hard look at that proper-ty and determine in my own mind if there’sany real value there. I need to see equity, and if itisn’t there, I just forget about it and go on to the next one.But, if there’s equity (and sometimes there’s gobs of it), I getbusy.I know, in all likelihood, finding that homeowner is going

to be the key ingredient needed to put a deal together on theproperty. Sometimes I can work it without the homeownerbut, generally, it’s a whole lot easier working together.

10 ways to find the vacant property ownerHere’s how you find the owner of vacant property:

(1) Call Information. It’s so obvious it’s often overlooked.There’s no need to jump through all the hoops when theoperator may have their info right at her fingertips. Callinginformation is always my first stop.(2) Visit the neighbors. The fastest way to find the ownersis nearly always from a neighbor. I just knock and ask if theyknow anything about the vacant house next door. Often, theproperty has become a bit of an eyesore and when a neigh-bor hears I’m interested in fixing that, they tell everythingthey know.

Listen carefully, because eventhough they may not know where theowners are now, they may knowsomeone who does, or they mayknow where they worked orwho they hung out with.(3) Go To The Assessor’sOffice. I like to head back tothe assessor’s office to seewhere they’ve been sending thetax statements. I also want tosee if they own any otherproperty. If I find other

addresses, I make a note ofthem.

(4)VisitTheRecorder’s Office.Back at therecorder’s office, I pull up every documentthey’ve signed in the last few years and lookfor any other addresses. It might be on adeed or a mortgage or on something else,

but I won’t know that until I look.If I find a VA loan, I’m guessing they got trans-

ferred. You may know that there are “locator” offices witheach branch of the military and for a nominal fee, if you pro-vide them with a name and social security number, they’llgive you the owner’s current location. If they’re military, Iput the locator to work for me.(5) Look For Marriage License Applications. At therecorder’s office they also file marriage license applications.When I see one, I glean whatever information from it I can.Ours include addresses, birth dates, social security info and,often, employment.I gather that information on both the groom and the bride.

The bride information is particularly important because witha uniquemaiden name orwith a previous address, I can oftenfind a family member who knows where they are now.(6) Check Voter Records. Also at the recorder’s office inmy county is the “elections” department where voter recordsare kept.Yes, that info is public record and available for theasking. Just plug in a name and the computer spits out what-ever they’ve got on them. Often, it’s their current address.(7) SearchCourthouse Records.Next, I’m off to the court-house. I pull everything I can find on the computer and look


those files over for any leads they might contain. If they’vebeen sued and garnished, I’ve got an employer.If they’ve recently divorced, I’ve got more info than I

want to know.Whatever cases are down there, I just pull thefiles and jump on in, looking for any piece of informationthat might lead me to their present whereabouts. On thesame computer, I can pull up all the Probate information.It’s always a good idea to check. Ditto for the Criminalcourts (you haven’t lived until you’vemade offers to guys inprison).(8) Look For Motor Vehicle Records. Driver records inmy state are confidential. No access, and that’s probably agood thing. But, if you know what to ask for and where toget it, you can get motor vehicle records.It’s a little antiquated and you have to use themicrofiche,

but with a name, you get a list of every vehicle they own.Type those plate numbers into their computer and you getthe state’s most current address on them.(9) Use CD ROM Phone Books. Those phone books onCD ROM are pretty good, but only if the owner has lefttown months and months (if not years) ago. I use themmore to locate people with identical last names or earli-er addresses.(10) Hire A Skip Tracer. There are professional skip trac-ers who will, for a fifty dollar bill, run a couple nationalcomputer searches. When all else fails, I fax them a nameand last known address and within twenty four hours, Iknow if they get a hit or not. They don’t always get them,but definitely worth a shot.Of course, this is how things work in my area with the

various public records offices.Your situation and access willbe different. Generally, the ideas are the same, you’ll justhave different ways to get at the info.I know, it sometimes looks overwhelming. Really, there

isn’t much to it. I just gather the information and follow upwith it as best I can. If I get a telephone number, I give thema call.With addresses, I send letters left and right (includingto the property address) and hope to hit a current address or,at the very least, get back a forwarding order.Do the same and you’ll likely find whoever it is you’re

looking for. Still not convinced? Believe it...that’s how I firsttracked down the girl I later married (BWD 850 - blueChevy Monza). But be careful here, I think they call it“stalking” nowadays!Joseph M. Kaiser is a successful real estate investor

active in today’s market. Joe started investing in real estatein the mid-1980s and soon found his niche in foreclosuresand lease options. He is the master at tracking down moti-vated sellers.


You don’t want to miss the RICH GENERAL MEETING & TRADE SHOW on

Saturday, January 7, 2012Meeting starts at 9:00 AM, but as always, we encourage you to arrive early to mingle and network with other RICH Investors and the RICH Business Members.

The Evolution of Self StorageWhy it has become the largest and fastest growing real estate sec-tor in the USScott MeyersPresident, Alcatraz Storage

Looking for a way to cash in on the Commercial Real Estate Boom! How about Buying Self Storage Facilities for$0 Down, using a brand new Government Backed Loan Program? Hey Commercial Wholesalers - How about findingthese deals, putting a package together, and then flipping ‘em to other investors who would love to buy them for $0Down and pay you $10,000, $20,000, even $100,000 for helping them?

Then you need to be at the RICH General Meeting this Saturday, September 7, at 9:00am, where Scott Meyers, thenation’s foremost authority on Self Storage Investing, is going to reveal how he and hundreds of his students areabsolutely crushing it in the Commercial Real Estate Business, Right Now!

Why Self Storage?1. It’s been the FASTEST growing real estate sector in the US for the past 30 years!2. Entrepreneur Magazine listed Self Storage as the FASTEST growing business in the US in its annual list of the top100!3. The Wall Street Journal stated that Self Storage is the MOST sound investment for building your financial nest egg.4. Self Storage has the LOWEST loan default rate of ALL commercial real estate property types! – 8% compared toapartments at 58%5. The Self Storage industry has nearly DOUBLED in the last 10 years!6. Demand projections show that it should DOUBLE again in the next 10-12 years!7. There are 23 million Self Storage Rental Units in this country compared with only 11 million Single Family RentalUnits! And………….8. There are NO TENANTS, NO TOILETS, AND NO TRASH!!!

Scott is living proof that you can start with no experience, credit or cash using his 6 steps to creating wealth with self-storage system. It truly is turn-key real estate investing business in a box! This is sure to be the one you really donot want to miss. So make your plans now to attend... we’ll save you a seat!

And... Scott will continue his morning presentation in an afternoon session this month!We’ll see ya’ there…

Meeting Place: Renaissance Houston Hotel6 Greenway Plaza East, Houston 77046

Meeting Times: Membership & Guest Registration: 8:00 am – 8:55 amNetworking & Coffee: 8:00 am – 9:00 amGeneral Session: 9:00 am – 12:00 noon


10 INEXPENSIVEWAYSTO SPRUCE UPYOUR RENTAL OR REHAB

by William Bronchick, JD

It’s easy to fix up your properties if you have unlimitedcash. However, you need to keep your repairs to a mini-mum to stay profitable. You also need to keep your proper-ties in good shape to attract tenants orbuyers.There are the basic improve-

ments, such as carpet and paint,but these can still costs thousandsof dollars. Here are some inexpensiveways to improve your properties withvery little cash.1.New switch platesThis is such a minor, yet overlooked

improvement. Most rental owners andrehabbers paint a unit and leavethe old, ugly switch plates. Evenworse, some even paint overthem.New switch plates cost about 50

cents each.You can replace the entirehouse with new switch plates for about $20. For the foyer,living room and other obvious areas, spring for nice brassplates. They run about $5 each - not much for added class.2.New or improved doorsAnother overlooked, yet cheap replacement item is doors.

If you have ugly brown doors, replace them with nice whitedoors (you can paint them, but unless you have a spray gunit will take you three coats by hand).The basic hollow-core door is about $20. It comes pre-

primed and pre-hung. For about $10 more, you can buy styl-ish six-panel doors. If you are doing a rehab, the extra $10per door is well worth-it. For rentals, consider at least chang-ing the downstairs doors.3.New door handlesIn addition to changing doors, consider changing the han-

dles. An old door handle (especially with crusted paint on it)looks drab. For about $10, you can replace them with newbrass finished handles. Replace the guest bathroom and bed-room door handles with the fancy “S” handles (about $20each).4.Paint or replace trimIf the entire interior of the house does not need a paint job,

consider painting the trim. New, modern custom homes typ-ically come with beige or off-white walls and bright-whitetrim. Use a semi-gloss bright white on all the trim in yourhouses.If the floor trim is worn, cracked or just plain ugly, replace

it! HomeDepot carries a new foam trim that is pre-painted inseveral finishes and costs less than 50 cents per linear foot.

Create a great first impressionby adding crown moldingin the entry way andliving room.5.New front doorYou only get one

chance to make a firstimpression. A cheap

front door makes a houselook cheap. An old frontdoor makes a house lookold. If you have nice

heavy door, paint it a boldcolor using a high-gloss paint.

If your front door is old, consider replacing it with a new,stylish door. For about $125, you can buy a very nice door.6.Tile foyer entryAfter the front door, your next first impression is the foyer

area. Most rental property foyers are graced with linoleumfloors. Consider a nice 12” Mexican tile. An 8’ x 8’ areashould cost about $100 in materials.7.New shower curtainsIt amazes me that many landlords and sellers show prop-

erties with either no shower curtain or any ugly old showercurtain in the bathroom. Don’t be cheap - drop $40 and buya nice new rod and fancy curtain.8.Paint kitchen cabinetsReplacing kitchen cabinets is expensive, but painting

them is cheap. If you have old 1970s style wooden cabinetsin a lovely dark brown shade, paint them. Use a semi-glosswhite and finish themwith colorful plastic knobs. No need topaint the inside of them (unless you own a spray gun), sinceyou are only trying to make an impression.Americans spend 99% of their time in the kitchen (when

Continued on page 17


DUE DILIGENCEWhether you are an investor or a lender, follow these rules,

or be prepared to take the most expensive seminar of your life.

When a person with moneymeets a person with experience,the person with the experiencewinds up with the money andthe person with the moneywinds up with the experience

Harvey MacKay

Ionce had a beginninginvestor ask me if his deal

made sense. Apparently a real-tor/guru had given him 3 compa-rable sales(comps) for a neigh-borhood and suggested that hecould flip the property and meethis profit goals. I was actuallysurprised the investor could ever think 3 sales compswould tell the real story. That would be like seeing a pic-ture on the front of a book and then thinking you knowwhat the story is about. This is not due diligence. Iremember buying my first low income multi-unit andafter analyzing the numbers, coming to the obvious con-clusion that this was the deal of the century, I wasamazed how others had missed it. That seminar onlytook 3 years to graduate from. The result was lots ofexperience and no money. Although I had been a land-lord for many years prior, I failed to reliably predictturnover. I took this seminar because I failed to seek theexperience of others who were in this business and getsome realistic expectations. Just so you have proof thatI graduated from this seminar, my definition of turnoveris : the event that occurs when a tenant moves out andmakes sure you work for free and don’t ever makemoney. High turnover comes when you have somethingthat no one else wants or there is a better option for yourcustomer. It’s also the time that you don’t have rent paidbut instead have expensive repairs and a mortgage.Turnover is without question the biggest single expensein landlordiing.Here are some due diligence basics that if you do them

right you will avoid the “Seminar.”Valuation. ARV- After Repair Value. You should

never have more than 70%to 80% debt or money inthe property once its com-pleted. We shoot for 65%.The real magic here is get-ting the value right. In thestory above with the real-tor/guru, remember the real-tor/guru had an incentive toclose the transaction, not tobe honest. When we look atproperties we will look ateverything that has sold andrented in the area in the lasttwelve months. We alsolook very closely at condi-

tion and amenities of other properties and try to correlatevalue. We also look at DOM (days on market). If you dothis right you are looking at 30+ properties and keep inmind the relationship between –size, lot size, age, story’s,amenities, condition, location in neighborhood.Title- Unless you are an expert don’t buy a property

without title insurance. Even then it won’t cover every-thing, for example if you buy the property for $50k andthen do $30k in repairs, your repairs won’t be covered inthe event there is a title defect. There are literally hun-dreds of things that can go wrong and even after 20+years of buying houses I am still finding new wonderfullast minute surprises.Survey- This is another area where I have proven

how smart I was, not once but twice. It wasn’t enoughthat I bought a house without a back yard, although itlooked like it had one. It didn’t have even one inch of aback yard, even though it had a back door and a fenceabout 30 ft behind the house. It turns out the backyardbelonged to someone else. I could go into the secondtime this happened the details are different, the result waspretty much the same.Hazard Insurance. You have to learn some rules

here. Probably the most important, is to have the righttype of insurance. If the house is vacant then it requiresa different policy than if it is a rental, also builder risk is


warranted when doing a rehab.Documents- As money gets tighter and investors are

having to learn how to be more creative then the docu-ments get more complicated, Its been a long time sinceI have done a straightforward deal. If it is a partnershipmake sure there are buyout provisions and if you are theone putting up the money then absolutely make sure youget a promissory note secured with a properly drafteddeed of trust, even if you are part owner. Remember thetitle company will not do the documents in your bestinterest, they will try to be neutral. If it’s your money,you don’t want neutral documents.Exit Strategy-You have to ask yourself, why are you

so smart that you can buy a property substantially belowmarket and then sell it or rent it when the previous geniuscouldn’t. I say this because if you don’t give the marketits due respect, it won’t respect you either. There areplans that will not work in one area and will in another,or with a different operator, will work perfectly. Doesyour exit strategy make sense for the location, for yourstyle? If that plan doesn’t work, what’s your back upplan? Remember the best exit strategy of all is to buyright, and have a good competitive product in a good mar-ket for that product.Repairs/Condition- You don’t know what, you don’t

know. You can look at a house and if you don’t have a lotof experience you will miss some high dollar items. Thisis where you may have to bring others in. But be carefulwho you ask. Does that person have a stake in the advicethey give you? Try to get a disinterested person to helpyou with this. Just realize with some work, you can getreliable estimates without overpaying. Here are somethings that could completely ruin your deal if you don’tget the proper discount, and you need to check for them:slab-structural , drainage, roofover wood shingles, mold,drywood termites-subterranean termites, neighbors-crime, utilities, MUD, HVAC, meth lab, functional obso-lescence. There are probably some more but these are thebiggies. I look for these every time. Now don’t get mewrong, some of these items are opportunities dressed inbad clothes and others are just deal killers.Due diligence, when you get the hang of it will take

about 30 minutes on the computer and about 15 to 30minutes at the house. When I am making an offer, Ialways make it subject to additional “Due Diligence”, butusually I know before I ever leave the house if it’s a dealor not.

Written by Ray Sasser, Race Home Management, LLC(281)727-8717, property managers that try to avoid theexpensive seminars.



What is deflation?Deflation is an economic term generally associated withdecreases in pricing and spending.

When and how did the current deflation begin?The introduction of the internet in the early ‘90s trig-gered deflation by rapidly increasing innovation. In thepre-internet world, the return of capital invested in a newgadget was protected by the time it took to invent, andorganize the production of a better model. For example,it took humanity over 4,000 years to build the very firsttelephone. The first cell phone was built some 100 yearslater; and today for only the purchase price of Apple’s4sI-Phone, users acquire global free video link when pay-ing for basic voice service. The internet breaks downbarriers to new ideas, and it accelerates innovationbeyond the time necessary to return the investment,which exposes investors to unacceptable risk.

Why is the shortage of acceptable risk translatinginto decreasing prices?Increasing financial competition for the decreasingavailability of acceptable risk is decreasing interestrates. For example, when two investors vie for oneopportunity to invest in a newly created “cantlose.com”their competition results in lower cost of investment cap-ital. The remaining, seemingly idle capital is lying inwait willing to work for the smallest returns. In turn, todefend, existing companies must decrease prices to dis-courage future competitors from entering the market-place.

But wouldn’t lower prices increase spending?When customers spend, they engage in profit maximiza-tion activity. During inflation, for example, customersspend more, because the future will cost more tomorrow.Because during deflation customers expect decreasingprices, profit maximization to the customer means spend-ing less.

OK, but then why are so many products going up inprices?

Inflationary prices on some products are caused byreduced supply which is a hedge against increasing riskfor existing businesses. For example, car making is prof-itable today only because production is reduced justbelow the level of pent up demand, as opposed to excessdemand only a few years ago.

And what about prices of commodities?It is through the price of commodities that we can meas-ure the rate of deflation. The shortage of viable invest-ment opportunities is causing commodities, especiallygold, to absorb excess cash. In terms of value of gold allgoods and services dropped in price by some 20% in2011 alone. Conversation over the uselessness of gold isbut an effort to protect the value of cash.

OK. But what about the cheap dollar?Twenty-first century deflation is global. In a world flushwith cash it remains for the most competitive currency toget the job done, and price out the others. Thus, just asan investor wins by providing the least expensive capitalit is the “cheap” dollar that is now the strongest curren-cy, even when declining overall, and not the other wayaround.

Lets’ bring it to the terms of Main Street .Twenty-first century deflation ends trickle-down eco-nomics. The defensive corporate profit hoarding, some$3 trillion using 2011 as a base line, has far worse socio-economic impact than an economy dominated by moneylosing enterprises. While individually money losing isundesirable, collectively, it has a positive social impactbecause a business loss enters the economy as someoneelse’s gain.While in the Keynesian non-growing economy the gov-ernment simply spends more money to stimulate it, moregovernment spending today worsens it, because it onlyincreases the pool of idle cash and decreases interestrates to below zero. The suddenly diminished ability oftraditional fiscal tools to leverage our way out of defla-tion seemingly transfers power over the economy to cor-porations. “Occupy Wall Street” is a spontaneous social

CONSEQUENCE OF INNOVATION: ABOUTTWENTY-FIRST CENTURY DEFLATION

By: Wojciech Kic


response to government’s inability to counterbalancecorporate interests. The successful effort to disperse it isthe paradox of the twenty-first century deflationary gov-ernance.

Are there other examples?Twenty-first century deflation is about extreme competi-tion. It demands a frictionless, waste free economy. It isa permanent process that demands concessions not onlyfrom companies but also from individuals. For example,the ongoing decreasing highway fatality rate and thecrime rate in America have been reducing collectivecost, and it represents a personal change in response tothe economic forces at play. Regrettably, less competi-tive societies will take longer to adapt, their breakdownis evident, and likewise it’s been ongoing. Afterall, wedid not get here overnight.

Can we stop deflation?Deflation now brings the future forward. It is a naturaloutcome of the quantum speed of progress which cannot

be put in reverse. Physical production of new gadgetshas necessarily retarded progress in the past. Theabsence of physical production will remove the last eco-nomic bottleneck. However, since the future economy willplay out in the virtual world, valuation models must beinvented to pay for new ideas that become pieces of thefuture. But for these models to exist, we must start thedebate about the future, and only then, with the end inmind, progress will absorb excess cash capital, and cre-ate widespread prosperity.

When do we start?Dealing with twenty-first century deflation IS new, andaccepting it will take some getting used to. The soonerwe accept deflation’s permanence, the sooner we canmanage its message, the delay of which grows at anincreasingly negative compound.

Wojciech Kic CPM, CCIM is President of Managerenthouses.comand has been a longtime supporter of RICH, writing many articlesthroughout the years.

From the Board – EducationDirector, Belinda LopezGreetings for NewYear!

I’m really excited about mynew role as Education Director forthe RICH Club. Since taking overthe role I’ve been researchingseveral new opportunities andlooking for ways to best serve ourmembership. In addition to ourRoad to Riches 101 courses we’relooking for roll out several classesand programs over the next year.With over fifteen years in theTraining and LearningDevelopment field I’ve helpedbuild training programs foreveryone from preschoolers toastronauts. I’ve developedmaterials for the classroom,elearning and virtual training(WebEx, GoToMeeting)environments. Here are a few ofthe projects we’ve started workingon:

The 2012 Bus Tour! Currentlyscheduled for April 21 – 22, wehave started planning and willhave the full schedule andregistration available soon.

The Professional HousingProvider (PHP) Certification – Weare working with the NationalREIA to develop a local programfor RICH members. The NationalPHP designation is a nationwideeducation-based certificationprogram designed to recognize thehigh level of knowledge andprofessionalism among thedesignation holders. It issponsored and overseen by the

National Real Estate Investor’sAssociation. This programincorporates 60 of training; 42hours of core curriculum and 18hours of electives.

90 Day Jumpstart your RealEstate Investing Program – Basedon the success of the focus group,the program will help you giveyou the skills you need to jump inand do your first deals.

If you have any feedback orwant to help develop some neweducation offerings, I would loveto hear from you. Remember, it’syour club, help us build theeducation program of yourdreams!

Send your suggestions toBelinda at [email protected].

From the Board – VolunteerDirector, Leo Muscarello

In the upcoming new year thevolunteers will be banningtogether to ensure that allmeetings are run smoothly. Thevolunteers will play a significantpart in upcoming boot camps, bustours and classes. The incentivesthe volunteers will receive will benumerous including but notlimited to free access to events,classes, bus tours, and passes fortheir friends and family and ofcourse exclusive drawings foritems such as but not limited to:discounted memberships, freemembership for a year, iPads,speaker product, music concertsclasses and more. Without ourvolunteers this “volunteer” club

cannot move forward and/orprosper. “Let’s make a differencein our own lives, in our own club,in our own future”.

Remember “We make a livingby what we get, we make a life bywhat we give.” Winston Churchill”

Contact Leo to volunteer [email protected]

From the Board – Treasurer,Steven Kaufman

The New Year’s ResolutionSOLUTION!

If you’re like me then youprobably make plenty of NewYear’s Resolutions. Most peoplemake resolutions dealing with oneof the three F’s: fitness, family,and finances. By the time you’veread this, the statistics tell us thatyou’ve broken most or all of yourresolutions, but it doesn’t need tobe that way. Have you everwondered why some people keeptheir resolutions and why othersdon’t. I have the resolutionsolution! Ready… The secretcomes from Woody Allen whosaid: “Eighty percent of success isshowing up”. And that my friendsis the resolution solution. If youwant to have a breakthrough inyour three F’s in 2012 then justshow up. Your resolutions relatedto finances are likely centeredaround your investments and,therefore, the RICH Club plays akey role. All you have to do isshow up!

Steven Kaufman has been on theBoard of Directors for The RICH

Club since 2004 and he’s the currentPresident of Zeus Mortgage, Ltd.www.thestevenkaufman.com.Contact Steven at [email protected]

From the Board – PromotionDirector, Charles Chin

2012 is a year for change forRICH. The Board wants RICH tobe the club you deserve and needto be successful in your investing.Members have asked for a daytimenetworking venue and we haveresponded with BOYL Tuesday.Pick-up lunch and a friend andcome to the RICH office between11:30 – 1 the 3rd Tuesday of themonth for some great networkingwith your fellow investors. We’llprovide the drinks.

We listened and the EnRICHerwill be emailed to all currentmembers every month. Theresponse to the DecemberEnRICHer being emailed wasoverwhelmingly yes, continue.

We need your input with thesechanges. Don’t like them, say so.Like them, say so. Wantsomething, say so. Needsomething, say so.2012 is going to be a great year foryou and RICH, I just know it!Charlie has been with StewartTitle for 12 years, is beginning hisfirst year as Promotion Director,and owns one SFR rental withmore to come in 2012. Send yourcomments and suggestions [email protected] or 281-300-1515.


All workshops meet at RICH Headquarters at 6611 Portwest Dr. (Key Map 492A) from 7-9 p.m. unless otherwise noted. Check the RICHwebsite at www.RICHclub.org for changes. Questions about workshops should be directed to Derrel Sims at [email protected].

FIRSTMONDAYJanuary 2ndNo WorkshopNewYear Day

SECONDMONDAYJanuary 9thHow to Find the Money to Buy NotesJWWarr

Plus.....Self Directed IRA’s, rolling over a 401k, bor-rowing money from your 401k or cash value life insur-ance to fund the note purchase. Some of our membersare already using JW’s services.

JWWarr CEOANW: American NoteWarehouse

THIRDMONDAYJanuary 16thHow to Go From Being A HUNTER, Struggling toLand a Single Deal, toBecome The HUNTED, Having To Turn Deals Away!NorrisWilliams

Norris Williams, Creator of the Entrepreneur’s X-Factor, will give you the Step by Step Blueprint toput your single greatest asset to work for you, to pro-pel you into a Market Leader. Market Leaders arethe ONLY Entrepreneurs that live the Lifestyle weall dream of. Every Entrepreneur has its ownIntellectual Property, and almost NONE profit fromit. You will leave this workshop with a THE mar-keting tool for the next decade.

FOURTHMONDAYJanuary 23rdA Topic of Great Interest to All LandlordsJim Smith

Attorney and Past President, Jim Smith will speak onlandlording (or to those soon to be landlords). As alandlord myself, you should not miss this great meeting(I have a bit of an inside scoop here, so takemy hint andshow up).

FOURTHMONDAYJanuary 30thHow Are Things Tracking?Stan Hallet

This is Stan’s semi-annual local/national Real EstatePredictions. Stan states: “I think Houston will showsignificant improvement in 2012.” Stan is a full timereal estate investor. He started investing in realestate in 1982 and weathered the big crash of theHouston real estate market. He has been a RICHmember since 1987. He made a great call in 1990and started investing in an up and coming area calledthe Heights. It was a great move and he reallyenjoys doing major rehabs on older properties. Heis known for his skills in opening floor plans,improving flow and adding WOW factors to hisrehabs. He has invested in single family, multifami-ly, bed & breakfast and a commercial building. Stanenjoys teaching and passing on knowledge to newinvestors. He also likes keeping up with Houston’seconomic statistics and how it affects the local realestate market. He has many investors that look for-ward to his predictions and his economicupdates. He warned investors about the subprimebust before it even hit the newspapers. In 2006, hewent against the experts that were predicting a downyear and said it would be a great year. It was the bestyear Houston has ever had in 20 years. His predic-tions have been tracking right on with what has beenhappening here in Houston. Come to the review ofhis 2011 predictions and how things are trackingagainst his prediction. Then hear what Stan seeshappening for the rest of the year. You do not wantto miss it!


traffic disruption• Uses very little energy!

HISTORYThe conventional concept of personal storage began

in England when British banks were asked to safeguardvaluables for clients embarking on extended voyages.Overcrowded vaults quickly forced them to seek storagelofts from drayage companies, which were the first mov-ing companies. The first mini-warehouses for householdand personal items were built. The two story structureswere built with packing on the lower floor and privatestorage rooms on the second. Except for expansion intomulti-story buildings, things remained the same fordecades, until the 1950s when costs started to rise. Thisled to construction of palletized warehouses which weredesigned to handle crated customer goods that could bestacked three levels high.Access to household/personal goods was restricted

and expensive, since customers had to make appoint-ments to obtain items and pay each time for the service(stored property could only be reached by forklifts whichwere operated by staff) and business hours were limitedand normally did not include weekends.Initial development of self storage facilities in the US

occurred primarily in the Western United States and theSunbelt states. Contributing factors were: a transientpopulation moving to new jobs and better climate, retire-ment condominiums, apartment and townhouse resi-dences, slab construction, etc.Many facilities were developed prior to 1979, with

1978 generally acknowledged as one of the greatestgrowth years in the industry. As the decade of the 1980sbegan, increased self storage construction activityoccurred along the Eastern coast of the United States,with increased interest in Canada, Europe, Australia andother countries of the free world.

SELF STORAGETENANTSIt’s been said that self storage is used by people and

businesses in transition, but that’s only part of the pic-ture. Self storage is used by a wide range of consumerswith different needs that may include:• Homeowners and businesses in need of a temporaryspace for overflow of property or inventory• Those in the process of relocating• Property stored in relation to an estate in transition due

Continued from page 1

SELF STORAGE INVESTING


to death, litigation, restoration, etc.• Businesses in need of space for general control of inven-tory, records, supplies and equipment• Businesses that are expanding or contracting• Businesses storing seasonal displays• College students storing books, desks, etc. during thesummer• Military personnel in need of low cost space or are ontemporary duty• Seasonal visitors with household items and sportsequipment

The advantage of using rental storage space isincreased flexibility, low cost, convenience, and value.Self storage space is generally rented on a month-to-month basis and does not commit customers to long-termleases. Tenants may typically leave whenever they wantand rent only the space they need.A recent study shows that the average length of tenan-

cy for a typical customer is 11 months, and 24 months forthe average commercial tenant. The cost of self storagespace is lower than office or retail space, saving usersmoney. On average, self storage is roughly 60% less thanthe cost of most office on a per square foot basis. Selfstorage users can often find facilities in their local areaand they receive additional service value because selfstorage managers are trained to counsel consumers onhow to store items more efficiently in less space, therebyreducing the cost.Self storage is a useful management resource for small

businesses, since businesses can easily obtain more spaceas they grow without committing to expensive long termleases. Furthermore, it provides businesses with a meansto cut costs, should they need to downsize. Self storageis also useful for college students and seasonal visitorswho may rent space for a season, and for military person-nel who go on temporary tours of duty, but intend toreturn to the area, and for those who can’t afford to rentmore living space.

TODAY’S MARKETEstimates of the overall number of self storage facili-

ties operating in the United States varies greatly but mostindustry veterans estimate that there are somewherebetween 45,000 and 50,000 facilities as of the date thishome study course went to press.As the population becomes more familiar with self

storage, the demand for off-site storage has expanded toaccommodate the growing needs of the business commu-

EXAS TURNKEYPROPERTIES.COM

A Family Owned Company


Did you know?RICH has a library with books, tapesand cd’s from some of your favorite

Creative Real Estate InvestingEducators? Visit the

Bernard Hale Zick Memorial Librarylocated inside the RICH headquarters.

nity by storing files, medical records, excess inventory,equipment, etc. In some areas business storage accountsfor 30% or more of the total tenancy of a facility. Easyaccess, convenient office hours, short-term rental agree-ments, and no long-term commitment to pay for spacewhich may not be needed in the future, make the selfstorage facility extremely attractive to the retail cus-tomer, contractor, home-based businesses, manufactur-ers, pharmaceutical representatives, etc.The industry still remains relatively unsophisticated

and highly fragmented. Today, roughly 75-80% of allself-storage facilities are owned by small independent“mom and pop” operators. In addition, there is a con-siderable amount of medium to large players undergoingconsolidation, although it is becoming more difficult forthe larger buyers to accomplish since most owners real-ize what a great low maintenance high-cash business itis, and therefore are reluctant to sell. As a result, the top50 companies control approximately 25% of the squarefootage in the industry.As demand for space has grown and the self storage

industry has evolved, consumers have become morefamiliar with the property type (92% of the households inthe U.S. were familiar with the concept, according to asurvey sponsored by the Self Storage Association in1989). Inasmuch, local and regional competition rangesfrom a handful of properties to scores in a given tradearea. Accordingly, customers may choose where theywill store and from many different options, with unit sizeand the choice of climate or non-climate controlled spacebeing the base options. Today, consumers have the abil-ity to compare and choose from among a variety of selfstorage property styles and customer services to meetspecific storage needs.Competition in the self storage market is increasing.

Maximum success for investors/operators depends on theability to meet customer needs with convenience andvalue.To satisfy customers, today’s self storage must look to

locate in retail corridors, light commercial or even high-density residential neighborhoods, in addition to tradi-tional industrial and heavy commercial areas. Newerfacilities emphasize architectural aesthetics in construc-tion and are designed to blend in with the retail or resi-dential nature of the areas they serve. Landscaping hasalso become a prime consideration, as well as the inter-action of storage development with adjacent plannedtracts of offices, retail stores and business parks, in orderthat incubator space is available to support public plan-ning. All of this is done with the aim of creating a clean,

RICH HOLIDAY PARTYENJOYED BY ONE AND ALL

Our 2011 Holiday Party was at SRO in Northwest Mall.A good crowd of members, guests, and vendorsattended and had a great time networking in a casualand festive atmosphere. Many brought canned goodsfor the Houston Food Bank to share their abundancewith those less fortunate. Holiday raffle prizes were pro-vided by New Western Acquisitions, Jet InvestorLending, Real Acquisitions, Zeus Mortgage, RICH andStewart Title.Kudos to President Laurie Ward for planning and coor-dinating the event.

SSAAVVEE--TTHHEE--DDAATTEEThe 2012 RICH Bus Tour! Scheduled for April 21– 22, two intensive days of learning and networking.Learn from those that are working/investing every

day. More details soon.


RICH HeadquartersThe Realty Investment Club of Houston’s home base isat 6611 Portwest Drive, Suite 100, located in the north-east corner of Interstate 10 and Loop 610 off of Old KatyRoad (Key Map 492A). The facility is open Monday toThursday, 9:30 a.m. to 7 p.m. and for special events,meetings and workshops. From Interstate 10, take theWashington exit north and veer onto Old Katy Road, thenleft on Portway and right on Portwest.

Hwy. 290Hempstead

Washington

Old Katy

Loop 610

Interstate 10

Memorial Park

Portway

Por tw

e s t

H

Invite a Friend—Earn RICH Bucks!Members are encouraged to invite their

friends and associates to join us at the nextGeneral Meeting. The guest fee of $30 iswaived for January. Please invite every-one you know to our new location. If yourinvited friend becomes a member and listsYOU as the referral, you earn $25 in RICHBucks!

RAFFLE TICKETWhy didn’t I get a raffle ticket?At the General meeting raffle tickets are given to members andguest as an incentive to be in the meeting prior to the start, usu-ally 9 AM. We love that you are in the vendor area speaking

with them or networking in the halls, but if you want a chance atthe raffle, be in the meeting room for the start. The volunteers

stop giving out tickets at 9 sharp.January raffle is for tickets to an Aeros hockey game, donated byZeus Mortgage and 2012 Appointment Calendar Books donated

by Stewart Title.

stable, secure upscale image that supports the percep-tion, and the reality of trust among current and prospec-tive customers.

Scott Meyers, CSSM© is the President and Owner of IndianapolisBased Alcatraz Storage™. He is also the nation’s leading speakerand educator in the field of Self Storage Investing through his com-pany SelfStorageInvesting.com. To reach him, or to invite him tospeak, call 877-366-5773; e-mail [email protected];visit www.SelfStorageInvesting.com.http://www.selfstorageinvesting.com/freeaudiocd.html

they are not watching TV). A fancy modern faucet looksgreat in the kitchen. They can run as much as $150, but notto worry - most retailers (Home Depot, Home Base, etc)often run clearance sales on overstocked and discontinuedmodels. I have found nice Delta and Price Pfister faucets forabout $60 on sale. 9. Add window shutters If you have ugly aluminum framed windows, consider

adding wooden shutters outside. They come pre-primed atmost hardware retailers and are easy to install. Paint theman offset color from the outside of the house - (e.g., if thehouse is dark, paint the shutters white. If the house is light,paint them green, blue, etc.). 10. Add a nice mailbox Everyone on the block has the same black mailbox.

Stand out. Be bold. For about $35 you can buy a nice col-orful mailbox. For about $60 more, you can buy a nicewooden post for it. People notice these things...and they likethem!

William Bronchick, J.D. is an author and attorney who regularly pres-ents workshops and do-it-yourself seminars at real estate and landlordassociations around the country. He is the president and co-founder ofthe Colorado Association of Real Estate Investors. He is also a pastspeaker at RICH.

Continued from page 7

10 INEXPENSIVE WAYS TO SPRUCE UP

General Meeting and Trade Show Saturday, January 7, 2012 – 9:00 a.m.

Renaissance® Houston Hotel Greenway Plaza

6 Greenway Plaza EastHouston, Texas 77046

Guest SpeakerScott Meyers

“The Evolution of Self StorageWhy it has become the largest and fastest growing

real estate sector in the US”

Registration, Networking and Vendor Trade Show open at 8 a.m.

See page 6 for more information

Directions: RENAISSANCE HOUSTON HOTEL FROM…….

WILLIAM P. HOBBY AIRPORT Turn right to Hobby Airport Boulevard

Airport Boulevard to I-45North on I-45 to Highway 59 South to

Buffalo Speedway exitFollow feeder road through traffic light at Buffalo

Speedway And turn under next bridge (Edloe)

Renaissance Houston Hotel is on the right

GEORGE BUSH INTERCONTINENTAL AIRPORT Follow I-45 into Houston to Highway 59 South

(Follow signs for Victoria)Take Highway 59 South to the Buffalo Speedway exitFollow feeder road through traffic light at Buffalo

SpeedwayAnd turn right under next bridge (Edloe)Renaissance Houston Hotel is on the right

6611 Portwest Drive, Suite 100, Houston, Texas 77024

Address Services Requested

Join, Learn, Grow

MON. JAN 2ND FIRST MON. NIGHT WORKSHOPS (NO MEETING)

TUES. JAN 3RD TOASTMASTERS

WED. JAN 4TH TAXES & ASSET PROTECTION FOCUS GROUP

WED. JAN 4TH SOCIAL NETWORKING, INTERNET MARKETING

& TECHNOLOGY

THURS. JAN 5TH WOMEN IN REAL ESTATE FOCUS GROUP

FRI. JAN 6TH CASH FLOW GAME

SAT. JAN 7TH GENERAL MEETING & TRADE SHOW

MON. JAN 9TH SECOND MONDAY NIGHT WORKSHOP

TUES. JAN 10TH TOASTMASTERS

WED. JAN 11TH MONTGOMERY COUNTY FOCUS GROUP

THURS. JAN 12TH INTRO TO REAL ESTATE INVESTING & MEMBER

BENEFITS ORIENTATION

SAT. JAN 14TH ROAD TO RICHES

MON. JAN 16TH THIRD MONDAY NIGHT WORKSHOP

TUES. JAN 17TH FOLLOW THE MONEY 101 - DAY 1


TUES. JAN 17TH COMMERCIAL/MULTI-UNIT INVESTINGFOCUS GROUP

WED. JAN 18TH OWNER FINANCE & REAL ESTATE NOTESFOCUS GROUP

THURS. JAN 19TH FOLLOW THE MONEY 101 - DAY 2

THURS. JAN 19TH TRANSACTIONEERING MASTERMIND GROUP

FRIDAY JAN 20TH BREAKFAST ROUNDTABLE

MON. JAN 23RD FOURTH MONDAY NIGHT WORKSHOP


WED. JAN 25TH OPPORTUNITY EXCHANGE & NETWORKING

THURS. JAN 26TH MOBILE HOME INVESTING FOCUS GROUP

MON. JAN 30TH FIFTH MONDAY NIGHT WORKSHOP

TUES. JAN 31ST FORECLOSURE 101 - DAY 1

TUES. JAN 31ST TOASTMASTERS

®

RICH® DATE PLANNER

Refer to www.richclub.org for updated/additional information

The EnRICHer - January 2012

Documents

key map 492a

realty investment club

motor vehicle records

renaissance houston hotel

profit trade association

real estate investing

real estate investors

real estate