Issue #2464

• WEALTHY: Profit from my mistakes (Dean Graziosi)
• HEALTHY: Change your life in 12 weeks (Craig Ballantyne)
• WISE: John Powell on making mistakes

ALSO IN THIS ISSUE:

• How to learn more about art than any book can teach you (Judith Strauss)
• 3 websites to help you get the lowest plane fares (Suzanne Richardson)
• It’s Good to Know… what’s in your food
• Add “caterwaul” to your vocabulary

== Highly Recommended ==

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We’ve got a who’s who of world-class Internet Marketing experts lined up for you, including Yanik Silver… Howie Jacobson… Rich Schefren… Bob Bly… Buck Rizvi… Alex Mandossian… and many, many more.

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 “The only real mistake is the one from which we learn nothing.”

John Powell

How to Avoid the 3 Biggest Pitfalls in Real Estate

By Dean Graziosi

Unlike many so called “real estate experts,” I am more than a teacher… I’m truly an active investor. I started investing in real estate at age 18, when I bought and fixed up a rundown apartment building in my hometown. And in the past 20 years, I’ve made millions of dollars.

Right now, I’m working on more than 25 deals. This allows me to share winning strategies from the past as well as cutting-edge techniques that work in today’s down market.

Yes, investing in real estate has some risk associated with it. Some people lose tons of money in the real estate game. But for every tale of woe and failure, you can find a tale of victory. You see, real estate isn’t rocket science. And many of the problems that precede a failure can be prevented.

In my experience, there are three major pitfalls that new investors encounter:

• Buying in the wrong location
• Buying at the wrong time
• Buying without examining the facts

Did you notice that none of those things are complex or technical? They all seem to be just “common sense.” Let’s look at each one and expose the iceberg under the surface.

Real Estate Pitfall #1: Buying in the Wrong Location

You’ve heard it many times… real estate is all about location, location, location. And while there’s no doubt that this is true, it’s a bit of an oversimplification.

Some of the ways location influences real estate investment values include:

• Population demographics related to people moving in and out of the area
• Quality of living factors (and these can change over time)
• Over-exuberance on the part of buyers and builders because of the area’s past history
• Major lifestyle trends that may not yet be apparent

These influences can apply to large areas of a state… or to local subdivisions or neighborhoods. The wise investor will focus on a local neighborhood he’s familiar with, but not to the exclusion of the entire city or county.

Location is more than just a pretty street with views. Here are some questions you should ask yourself before you invest in a property:

• Is there job growth, stagnation, or shrinkage here? (If an area has a sudden increase in jobs, more people will flood in, driving up real estate prices and apartment rentals. If an area suddenly loses jobs, more people will leave, depressing real estate prices and lowering rental demand. Both situations create different but profitable opportunities.)

• Are industry and commercial ventures moving in or out?

• Has there been a recent trend for government to dedicate large tracts of land for parks or green space? (This reduces land inventory for building, makes life more pleasant in the area, and is, thus, a predictor of more people wanting to live there.)

• Has the trend for more parks and green space driven builders to over-construct new homes… beyond the current demand for them?

• Are trends unrelated to the immediate area going to impact prices or the demand to live there? (For example, U.S. home prices fell 4.8 percent in the second quarter of 2008 compared with a year ago, a new record low. This could indicate that a home that was appraised for $200,000 a year ago and is on the market for $190,000 still may not be a good deal.)

• Are high gas prices going to cut into the demand for more rural living… or increase the demand for homes in urban areas?

The changes in demographics and/or trends that make a location more or less desirable happen gradually - and a careful investor makes every effort to uncover them.

Real Estate Pitfall #2: Buying at the Wrong Time

Look not only at what is happening in an area, but also how long it’s been happening. The announcement of major new land allocations to green space, for example, can be a good thing - but buying several years after the fact could be a purchase into a market about to change.

One of my students bought a nice three-bedroom brick home in a good rental area. Based on his research and knowledge of the area, he purchased the home with 100 percent financing and rented it for a $100 per month positive net cash flow (after paying mortgage, taxes, and insurance).

He bought this home because he could see that the path of commercial development was headed right through the area where it is located. And he plans on holding onto it until commercial development drives up the property’s value and he can apply for rezoning to office/commercial and either sell or lease it.

He knows that he will need to hold onto this property for four to five years to maximize his profits, but since he bought it with 100 percent financing and the place actually makes him money every month, he is in no rush.

Real Estate Pitfall #3: Buying Without Examining the Facts

Any successful investment starts with a good buy. Making a good buy in real estate requires a great deal of valuation analysis.

The following story about two of my friends illustrates the dangers of relying too heavily on your emotions and not enough on objective information that could be staring you in the face.

“John” and “Joan” fell in love with a beautiful Victorian home the moment they stepped inside. Although the house was in bad shape, it had leaded-glass windows, carved woodwork, built-in hutches, and hardwood floors. They bought it, cleaned it up, and made it sparkle.

“We loved the house even though it was in a questionable neighborhood. As a result, we violated the number one principle of real estate: Location, location, location. To make a long story short, the beautiful house we loved could be rented only to less than desirable tenants, because the type of tenants we’d hoped to attract didn’t want to live in that neighborhood.”

Although John and Joan eventually sold the house for a small profit, they would have been better off had they examined the facts and made a decision to buy a different home in a much better neighborhood.

Keep in mind that though real estate is local, major national and international events and trends can help the worst of markets… and damage the very best. So be sure to analyze a real estate investment’s national and local factors. Still, one very positive local factor can outweigh multiple national factors.

Start by researching location and market timing, then research them again. Get the picture for the area before you narrow your search to specific properties. Once you’ve decided that timing and location are right, then look at individual homes.

It is now number-crunching time. There simply is no substitute for a thorough property evaluation using all of the mathematical valuation tools available.

• What is your gross potential income - the rents you can count on to be paid regularly and on time?
• What is your breakeven ratio calculation (fixed costs/gross profits) for that magic turn to positive cash flow?
• What are all your potential expenses and risks?
• What is the property’s investment potential? (Use the cap rate calculator at www.deangraziosi.com for this.)

Your lender may keep you focused, because they will likely want to see numbers that assure them of a performing loan asset. But in the end, doing the math well is your responsibility… and to your benefit.

Sure, it takes work to find the right properties. But it’s not complicated. You don’t need any special education or skills. It’s all about gathering information and making decisions based on hard factual data, proven calculations, and a little bit of luck.

Hey, if a naive kid like me - who came from no money, had no mentors, and never went to college - can do it… you can too! By acquiring the right knowledge and taking the right actions, your first deal could be just weeks away.

[Ed Note: If anyone knows about the pitfalls of real estate, Dean Graziosi does. He's a real estate expert, teacher, and author who's been investing since age 18! His book Be a Real Estate Millionaire is a New York Times, Wall Street Journal, Amazon.com, and USA Today best-seller. For an ETR-reader-only special on this book, go here.

Once you've got a solid foundation with Dean's guidelines for beginners, you'll be ready to start learning the techniques that will make you rich. Of course, real estate isn't the only investment that can make you millions. Get some of the biggest secrets to churning out cash from 12 of the world's experts in building wealth at ETR's 2008 Info-Marketing Bootcamp. Learn how you could be making $1.2 million or more in 2009.

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Living Rich: What You Can Learn About Art From a Five-Year-Old

By Judith Strauss

When my children were young, we lived walking distance from the Philadelphia Museum of Art. And we often wandered over to spend an hour or so.

I would choose a different collection each time. Medieval. Renaissance. Impressionism. Nineteenth-century portraits. Modern/contemporary. Jennifer, Morgan, and I would go to one room of one exhibit and park ourselves in front of one painting - usually the biggest or the smallest. (Kids like extremes.)

We'd look at it for a while.

"Do you like it?" I'd ask.

Whether the answer was yes or no, the follow-up question was the same: "Why?" And we'd consider the possibilities. (Sometimes, we even gathered a small group of people who joined in.)

As you might expect from a five-year-old and a nine-year-old, their observations were pretty straightforward:

"I like/don't like the colors," Jennifer might say. "They make me feel happy/ sad/ jumpy/ creepy."

"Why is the sky so big/small?" Morgan might ask.

"It looks like it's not finished on the bottom."

"I wonder why she's holding that book."

Though deceptively simple, questions like these are basic to understanding a work of art - and they aren't necessarily easy to answer. I didn't even try. I'd just say, "What do you think?" And after listening to the ideas my children came up with - and encouraging them to keep talking - I always walked out of there feeling like I knew a lot more about art than I did when I walked in.

The lesson: If it's in a museum, it's almost certainly a worthwhile piece of art. And even if you don't like it, there's a reason for every decision that was made by the artist. To use those muddy colors, for example... to paint the sky as a barely visible strip at the top of the canvas... to have the paint fall off the top edge of the canvas or not quite make it to the bottom... to place that particular book of verse in that elegant lady's hand.

So look at art through the eyes of a child, instead of the eyes of a critic, and try to figure out why the artist did what he or she did - especially the things that bother or confuse you. You'll teach yourself more than you can learn from any book or course.

[Ed. Note: If you've never done it before, take a good, long look at a piece of artwork today... in a museum, in a book, or on your own wall. Then share something about it that you find especially interesting - right here.]

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Quick Travel Tip: How to Buy Your Plane Ticket at the Right Time

By Suzanne Richardson

It’s no secret that airline tickets are pretty steep these days. But they still fluctuate. If you’re interested in getting the cheapest tickets possible, several travel sites have come up with “fare trackers.”

Kayak.com, for instance, will send you a weekly e-mail alert that shows you a flight’s current price and how much it’s changed since you signed up. You simply type in the details of the flight you want to track. You’ll see a little link at the top left of the results page that says “Track fares by e-mail.” Click it, create an account, and you’re all set.

Sites that offer similar services are FareCompare.com and Yapta.com.

[Ed. Note: Why not use one of these services to get the best price on your airfare to ETR's 2008 Info-Marketing Bootcamp? Of course, you don't have to worry about paying a few extra bucks for tickets... after all, you'll be attending an unprecedented conference where each speaker will give you a specific idea that can make you at least $100,000 in 2009. Sign up for this millionaire-making event today.]

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The 0.3% Solution

By Craig Ballantyne

Guess what? You can improve your health and change your life. And all it takes is 12 weeks.

If 12 weeks seems like a big commitment to you, you need to take a good, hard look at your priorities.

Let’s say the average person lives for 75 years. At 52 weeks in a year, that’s a lifespan of 3,900 weeks. Which makes 12 weeks only 0.3 percent of your entire life.

0.3 percent! That’s nothing.

Surely you can eat healthfully and exercise for 0.3 percent of your life. It’s a sliver of time in the grand scheme of things. But it can be massively significant in terms of your lifelong health.

So block off the next 12 weeks for a body transformation. And use the following three guidelines to get a huge return on this investment of time:

1. Plan out three four-week workouts. Each workout should be slightly different.

2. Every Sunday, plan your meals for the week, do your shopping, and prepare as much of that food as possible.

3. Use an online weight-loss club or message forum to get the social support you need to stay on track.

[Ed. Note: Make a promise to yourself right now that you'll focus on your health for the next 12 weeks. For specific techniques that can help keep you on track, click here.

And if you want a top-notch fitness program that can help you burn fat and build muscle, check out Craig Ballantyne's Turbulence Training program.]

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It’s Good to Know: What’s in Your Food

You try to make good food choices, but, too often, the nutritional labels are confusing instead of helpful. Now, thanks to Diane Manning, there’s a way to decipher them.

Manning, who suffered for years with a digestive illness that could be controlled only through diet, created Labelwatch.com, a site with nutritional data for over 25,000 different products. The products are divided by category (from Baby Food to Soda & Drinks), and can be sorted in several ways. Unfamiliar ingredients are color-coded (green for “beneficial,” orange for “okay,” red for “cautionary”) and indexed. Click on one, and you’ll have more information about it than you’ll ever need.

(Source: The Wall Street Journal “Market Watch”)

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== Highly Recommended ==

How Many Coulda-Woulda-Shouldas Are Cluttering Your Shelves?

Does this sound familiar?

You have big plans…

Then you fall off track…

Or get sidelined by your day-to-day responsibilities…

And then you decide to push back your dreams another week or month or year.

“I’ll just wait until January,” you say. “Then I’ll make a resolution to start again. And I’ll really do it this time.”

But guess what? You NEVER take action on those goals.

It’s time to break the cycle and make your dreams come true.

Word to the Wise: Caterwaul

To “caterwaul” (KAT-ur-wawl) - from the Middle English for “cry like a cat” - is to make a shrill, discordant sound or have a noisy argument.

Example (as used by Paul Hoggart in The [London] Times): “In the early days, when people were still shocked by the novelty of cursing, screaming, caterwauling emotional incontinents attacking each other on stage, [Jerry Springer] used to produce high-falutin’ justifications for the show.”

[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]

Copyright ETR, LLC, 2008

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