Bernard Zick's

REIT REAL ESTATE REPORT                         

November 2003

The REIT Real Estate Report is published about once a month. It is intended to serve no special or worthwhile purpose.  It is just my way of telling you what is going on in the world of real estate education.  My only goal is that I don't get sued and you are entertained a bit.  For an e-newsletter of merit, our next issue of Advice for the Impatient Investor will be out the first week of December.

Editors: Bernard "Barney" Zick bernard@zick.com, Karen Zick and Amy McIntee

Who Started all this Real Estate Education?

The Best Deal in Pre-Packaged Investor Web Sites

Liberal Bashing?

Should You Believe Those That Tell You Hotel Keys Hold Dangerous Information?

A Success Story

Last Chance to Upgrade Just About EVERYTHING!

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This “history” is guaranteed not to change your life!  But have you ever wondered how all this real estate education started?  I do get asked now and then, so here is the first in a short series…

Back in the dark ages, just after WWII, there was a hot shot real estate broker in San Diego by the name of Richard R. Reno.  He was a pioneer in many ways.  GIs who came from the farm had a chance to see the paradise called San Diego when they shipped out to war.  When they got home they were buying houses there left and right.

A growing part of Reno’s clients were buying houses to rent.  Income taxes were sky high in the early 1950s and Section 1031 of the IRS code was very important.  If you owned a house for investment purposes, you could exchange it for another property to be held as an investment and not pay any taxes (subject to a few rules of not getting out of debt and not getting unlike kind property as part of the deal).

Exchanging become so huge that Reno started a national organization called Traders International.  Huge crowds attended their conventions. Reno and friends started teaching classes on “creative” real estate transactions and how to do them.

Reno wanted the traders to become a major arm of the National Association of Realtors.  A number crunching group said it should be a sub-set of the newly forming Commercial Investment Division.  A battle ensued and Reno lost.

Reno did his thing until 1962.  He started a “By Invitation Only” group called the "Society of Exchange Counselors” and started a magazine called RENO Magazine or the Real Estate News Observer.  (By the way, the SEC still exists. I attended their 40 year reunion last year.  I used to be an active participant in SEC.  RENO Magazine was later purchased by A.D. Kessler -- no relation to Ernie -- and is still read by thousands each month.)

Reno and other members of the SEC started putting on courses sponsored by RENO Magazine.  They included “Broker Estate Building,” “Creative Real Estate” and “Considine’s” tax course, to name a few.  In the early 1970s, it was the only game in town.  When people like Robert G. Allen started doing his research into creative techniques in the late 1970s, he made friends with A.D. (who by then owned the magazine) and attended all the courses he could.  That is where I met him.  I was an instructor for “Creative Real Estate” sponsored by A.D.  But that is another story.

The only outside brokerage source of knowledge was William Nickerson who wrote a book on how he turned a few hundred dollars into millions.  A guy named Al Lowry worked for him in the office, but that is enough for this time.  Next time, dear reader, we will tie Lowry, Allen and the king of big educational events, Mark O. Haroldson, into the story.

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Okay, I wanted to know for myself.  I figured it was fair to ask you to help in that I was planning on sharing the information with you.

A couple of months ago, we sent out a request for information from our subscribers about their experiences with real estate investor web sites.  I found the realistic sites cost between $595 and $3,995, up front.  Five "custom" folks we met with wanted $10,000.  I'm cheap, but I don’t waste money.  My usual tact is to find out what is the least I can pay to get the most benefits for the money.

InvestorPro was the winner.  Their canned web site has all the whistles and bells we needed.  It looks good.  It opens easily and it is easy to navigate.  Most of all, Lynn, the guy that owns the company, is an investor and really dedicated to customer service.  (I think this guy sleeps with his great wife on one side and his wired lap top on the other.  I have sent him emails at all hours of the day and night and always get some kind of a quick reply.)

Here is the honest scoop.  I picked him because he was the "best buy,"  but, I didn't stop there.  Wanting to tie you forever to me so that you will consider me your source to solve your real estate investment business challenges, I negotiated a discount for you!  You can go to InvestorPro.com/zick/ and get a $50 rebate.  When you submit the form on the page you will be redirected to their main site and you will receive a response that tells you that you now will get a rebate, but, here is the warning.  The offer is only good for 15 days.  So look at what they have and, if you are serious, follow through quickly.  You will get a form to submit for the $50 rebate and Lynn will tell me you joined our group.

Why bother?  Well, one of the best ways to find motivated sellers is to print up signs.  However, on a sign, you can't tell your full story, but, you can on a web site.  The same thing is true for a door hanger or a business card or a flyer.  All you need to do is catch the right person's attention, not write a book.  If they are interested, they will go to your web site.  Major corporations have learned this.  They put their web site in their ads.  Radio spots now give you a web site.

More importantly, if you want to tell your entire story to a home seller, you would need to spend hundreds to thousand of dollars on a brochure.  Guess what? You now have an electronic brochure! I needed to do something and I did not want to invest the $100,000 I have in www.zick.com on this site, and I wanted it up in a week.  Take a look at  www.zickinvestmentproperties.com and you will see what we are using now.

Yes, if enough of you sign up, I'll get my darn $595 back.  But you know, one $3,000 site offered me a site for free, no questions asked, if I would just send you to them.  But, no, I sent you where I thought your money would do the most good.  I'll look out for you so you can be my next success testimonial like the one you'll read below in this issue!

In fact, here is an even better offer.  You get your web site with these guys, do a deal anytime -- anytime, as long as you still have the site -- and I will personally give you a $595 credit for books, tapes or seminars for you or a friend as a thank you for the testimonial!

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I recently got an email saying I should stop "bashing liberals.”  I guess they get more from me than others, but then there are a lot of right wing conservatives that rub me the wrong way too.  The main difference is that I don't find the conservatives with their hands stuck in my pocket as often as I do the liberals!

I guess what makes me the most upset is the extent to which the party on the outside will go when they are out! (The Republican’s were not nice about Clinton’s affairs even though we know Eisenhower and others had them too.) It is one thing to have a differing opinion; it is another thing to stretch the truth in the name of “free speech."

There are those that did not like the way Bush’s tax cut was computed, the way it favored the rich.  Here is a good lesson on how our tax system really works that does a good job of explaining the recent Bush Tax Cut and how the other side’s view fit with reality.  Remember, this is the tax cut that even the totally liberal New York Times recently said sparked our current good numbers for the economy.

How Taxes Work. . .

This is a VERY simple way to understand the tax laws.  Read on -- it does make you think!!

Let's put tax cuts in terms everyone can understand.  Suppose that every day, ten men go out for dinner.  The bill for all ten comes to $100.  If they paid their bill the way we pay our taxes, it would go something like this:

The first four men, the poorest, would pay nothing; the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man, the richest, would pay $59.

That's what they decided to do.  The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve (in tax language, a tax cut).

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20."  So now dinner for the ten only cost $80.00.

The group still wanted to pay their bill the way we pay our taxes.  So the first four men were unaffected.  They would still eat for free, but what about the other six, the paying customers?  How could they divvy up the $20 windfall so that everyone would get his "fair share?"

The six men realized that $20 divided by six is $3.33.  But if they subtracted that from everybody's share, then the fifth man and the sixth man would end up being PAID to eat their meal.  So the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59.  Each of the six was better off than before.  And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings.  "I only got a dollar out of the $20," declared the sixth man who pointed to the tenth.  "But he got $7!"

"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar, too.  It's unfair that he got seven times more than me!"

"That's true!" shouted the seventh man.  "Why should he get $7 back when I got only $2?  The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison.  "We didn't get anything at all.  The system exploits the poor!"

The nine men surrounded the tenth and beat him up.  The next night he didn't show up for dinner, so the nine sat down and ate without him.  But when it came time to pay the bill, they discovered, a little late what was very important.  They were FIFTY-TWO DOLLARS short of paying the bill!  Imagine that!

And that, boys and girls, journalists and college instructors, is how the tax system works.  The people who pay the highest taxes get the most benefit from a tax reduction.  Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Where would that leave the rest?  Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!

T. Davies, Professor of Accounting & Chair,

Division of Accounting and Business Law

The University of South Dakota School of Business

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I ALMOST put an article in this newsletter warning you about hotel keys.  Two subscribers sent me emails saying that hotels have your life story, credit card information, etc. on the key.  Being a cautious editor, I had Amy check it out.  It turns out it is one of those many hoaxes that get passed around.

Go to www.hoaxbusters.ciac.org/HBHackedHistory.shtml#hotelkeycard for more information.  (As a result of this, hotels will now have to replace thousands of keys because people will be tossing them out to protect themselves from an identify theft threat that does not exist.)  So why mention it? If you read email newsletters, you are a prime target for email hoaxes. If you did not know that, there are several places to check out the validity of these stories.  I figured that you'd want to know.  Enough said.

BZ

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We always enjoy hearing from our students who are achieving their goals using our techniques.  If you have a story to share, just send the details in an email to newsletter@zick.com with "success story" in the subject line.  Here is an example of a student who is getting results!

Barney,

I would like to say a huge thank you for helping me learn how to create cash.  The tools and the "cookie cutters" I have learned are awesome.  I am still working on a business plan and currently have acquired four single-family homes for only a $10 option consideration.  I am trying to negotiate for a mobile home park in Dallas that is 100% occupied and should yield about 30K/yr net cash flow before any forced appreciation.  The current owner hasn't raised rents in eight years. 

Again, thank you Barney and Karen!

Russ & Cindy Sanders

Burleson, TX

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This is ONLY important to our current students.  If you have never attended any of our events or if you don’t have some of our "stuff" you don’t have to bother to read this.

Don’t say we didn't tell you.  We have been putting on a major push to add new materials and change the way we offer investor education.  Things will be a changin'! We are dropping Bronze and Silver levels as categories.  If you want to be GOLD level and get the consulting benefits we have offered in the past, call the office NOW.

Current consulting clients were told that they had one year to activate their consulting.  For most of you that year has passed.  We will give everyone that is currently Gold level all the way through the end of 2004 to get started. Your consulting benefit will be considered as used after that.  Of course, time permitting, I will take time for you, but after December 31, 2004, I will only be able to consider providing consulting to students on a “time permitting” basis.

Rest assured, if you had the right to attend a Boot Camp, that will continue. However, Boot Camps will be priced more competitively in 2004.  The Platinum Program will be changing too.

So, just consider this a public service announcement.  If you are on board with us, great -- you are protected!  If you were planning to wait until later, later is over any minute now!

The Fine Print...

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We will publish the REIT Real Estate Report, containing Real Estate Education Industry News and a lot of personal opinions, and Advice for the Impatient Investor, approximately once a month.  (However, keep in mind, our newsletters are free so don't get upset if we skip one occasionally!)

Advice for the Impatient Investor has been published for thirteen years (but, not in a row).

Folks smarter than us told us to say: We take no responsibility for the accuracy of the postings.  All contents of the postings are the responsibility of the posting party.  The foregoing material is strictly for informational purposes only and does not provide legal, financial, accounting or investing advice or services. Use of any of the foregoing information does not create a client relationship.  You should not act on the information provided without seeking legal, accounting and tax counsel of your choice.

We reserve the right to terminate the subscription of anyone at any time.

Copyright note: Submission of an email message or art work affirms that you are authorized to and have given Bernard Zick, et al, non-exclusive permission to reprint the content of your message in all forms, electronic or otherwise, in all languages throughout the world.

Copyright © 2003 by Real Estate Investors Training Corporation, Kingwood, TX

ISSN # 0272-8559

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Mail to: P.O. Box 6399, Kingwood, TX    77325-6399
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