"The End of Segregation..."

In the 1910's and 20's the majority of American Cities were a combination of gold encrusted night clubs and movie theaters around the corner from the filth and squaller of tenement houses, and down wind from the black soot of the shoe factories, etc.

Even today when you say the word "Pittsburgh", some people (who have never been there) think of city trapped underneath a black sky of fumes being belched by steel plants working over time. Well they have not made much steel in Pittsburgh, and to the best of my knowledge there are no more shoe factories in Chicago and the housing laws enacted in New York have pretty much wiped out the fire-trap apartment buildings of yesteryear. However, we all today still live with many of the zoning laws that were enacted in the 1930'2 and 1940's that were designed specifically to do one thing -> Segregate land uses in this County. Specifically, New York City in 1916 passed the first set of laws to regulate (city wide) what land owners could do on their land. These laws were called "Zoning Regulations", and in 1926 the United States Supreme Court upheld the right of all U.S. states to impose zoning laws on landowners. The specific court case was Village of Euclid, Ohio v. Ambler Realty Co. (Euclid v. Ambler), for you legal scholars: 272 U.S. 365 (1926).

Ever since Euclid v. Ambler, cities and counties all across America have enacted laws designed to do one thing: Segregate!

To keep the home owner from the factory and the warehouse from the apartments. And for an industrial society controlled by "profiteers", one can argue that this was probably a good thing.

But we are now 100 years later, and to the best of my knowledge, the only thing we "mass assemble" in America are Big Macs... "two all beef patties, special sauce, lettuce, cheese all on a sesame seed bun..."

So in reality, zoning codes designed around the America of the 1920's in many ways do not work for America of the 2020's. And many cities, especially big cities, have begun to realize this. In fact even smaller cities like Bowie, Maryland have come to realize that shopping, next to restaurants next to offices, next to housing (done right) is a "Good Thing"!

In the Washington DC area, the three regions of town with the highest land values (Alexandria, Bethesda and Georgetown), all have one thing in common, which accounts for them being the "Most Desirable" places to live using land values as an indicator: They all believe strongly in the concept of MIXED -USE. or the mixing of uses right next to, and in some cases right on top of, each other!

All Hail the END OF SEGREGATION AND THE Dawn of MIxed-Uses!!

Clearly, the grand idea of living, working and "playing" in the same neighborhood is coming of age, versus getting in the car and driving to everything...

Chicago is a great town to see the idea of "mixed-uses" in full swing. Even in the "suburban" parts, neighborhood shopping is close to housing, and small office buildings. With beautifully landscaped sidewalks connecting everything, and many pieces within an easy walking distance of each other.

As investors, this is a trend that we need to pay attention to. I understand that many of us our "opportunist" and will go where the deals are, but as we fine tune our craft, targeting areas that have either a strong-mixed use orientation, or are moving in that direction could prove to be very profitable, long term.

"It's Amazing What You Can Do With a Postage Stamp..."

I'm in Chicago for my sister's bat mitzvah and decided to stay downtown at the new Courtyard by Marriott, just off Michigan Ave on the "Miracle Mile".

From my corner room on the 18th floor I can see out to the condo's along Lake Michigan, as well as the commercial properties along Ontario Street. I am looking down on a "cute little number" a brand new 12 story Fairfield Inn by Marriott sitting on a lot no bigger than two row homes. In fact, this is probably exactly what they tore down to build this little gem.

Smack dab in the middle of 60 story buildings is this little gem of a hotel.
It is absolutely amazing what you get on a postage stamp sized lot!

Just looking out the window and at this property brings to mind a point I am going to stress in my upcoming talk on developing commercial properties for the DC real estate club (http://www.DCREIA.com) and during my presentation at the Real Investors' Mid-Atlantic Commercial Property Summit in December (see http://www.Realinvestors.com for future details), which is:

Contrary to popular belief, commercial property developers/investors DO NOT take risks!

That is, they do not take "stupid" risks. Just the opposite is true, most developers tend to let the market tell them what to do with their properties, and they are always on the lookout for great ideas, buy looking at what other successful developer have done.

If you have not gotten "away" in a while, let me make a suggestion that will be good for your mental health and your pocket book. Get away to a major city for a long weekend, and go "exploring"!

When I say "major" I mean the Big three: San Francisco, Chicago and New York. There is absolutely nothing wrong with other cities, including DC and Bowie ;) But if you really want to go on a "treasure hunt" for great and creative ideas, you have to get to one of the big three!

Think about it...!! If you were in the fashion business, you would make an annual trip to Paris and Milan part of your "Must Do's". As a real estate investor shopping for ideas in one of the great cities should be a part of your annual "Must do's"?

You should also speak with your CPA. It is quite possible that if you do it properly you can structure the trip as a business expense. And when you go, make sure you stay in one of the "off the beat and path" hotels, not the big flagships! Does not have to be the "flea-bite Inn". There are plenty of great Hampton Inn's Quality Suits and Fairfield Inn's which have been built within the past 5-7 years that are right around the corner from the big convention type hotels. Plus all you really want is a clean bed and a shower, cause the purpose of the trip is to go "Urban Exploring". Take your camera and a pair of great walking shoes and go hunting for great ideas!

I love Seattle, San Antonio and of course, Carmel. But for "field trips" to come up with great ideas you can implement in your market, there is nothing like the Big Three. These cities are amazing for the creativity you will see, not only downtown, but in the close in parts on lots no bigger than a "postage stamp"!

#5 - You Can Only Win This Race, If You Have...

... People! That's right - People "...Soilent Green is..." <- I couldn't help my self, sorry :(

Yes, I wish I had known this fifth thing prior to leaving my full-time job.

The entire real estate industry works because of people. Not just any people, but specifically, true independent contractors who understand (and accept the fact) that if the deal does not close, they don't get paid.

This one mind-set makes Real Estate unlike any other industry or profession. Which is also why it is unlikely that in the future any bank, or one real estate firm will ever dominate the residential real estate business.

If you had a front row seat for the "Dot Com Meltdown", you have heard all the pitches about the real estate industry being a "dinosaur" and all of the hoopla about "market inefficiencies because of fragmentation" and the "need for consolidation", blah, blah, blah...

The truth of the matter is that the real estate industry works just fine like it is, independent contractors, working towards the same objective, getting the deal closed, and this is totally unlike any other business. In most other industries, people get paid every day for just "showing up". Even in the stock market, which use to be totally dominated by the commissioned broker/agent, people really do not care if your transaction closes - they get paid whether you're happy or not.

Real estate is just the opposite. If the deal does not close, commissions do not get paid and vendors and other support folks do not get invited back for the next deal.

So, what does this have to do with you....?

Real Estate people (after the newness wears off) tend to not work for money, they work for lifestyle. Meaning, if you really tick them off, don't be surprised if you (as the client) get "Fired!" Initially, all new agents want as many clients as they can get their hands on, then over time as they get really good at what they do, or quit, they realize that they do not have to work with "everybody" to make a decent living, and soon they go about the business of deciding who they will work with, and who they will not. The same is true of good title companies etc. Money is not the object. The real estate biz is very pure. Everyone pays the same commission (meaning, what every the agreed to commission is by that particular seller) therefore, the broker/agent could really care less who shows up, but all things being equal, if there is someone they like to work with, guess who gets the call first on deals.

In most other industries there is a "pecking order", the hire you go, the more people do stuff for you because "you are the boss", even if your attitude stinks. In real estate there is also a pecking order, its called: doing business (that is repeat business) with people you like and trust. I have had many an agent and title officer go the extra mile for me, simply because I end every conversation with "Thank you" and begin each one with "Please". I had to train myself to do this, because I learned this lesson the hard way.

Coming out of "Corporate America", you learn to bully your way around. In fact in many corporate jobs (and military/government) you can not get things done any other way. But in making the transition to real estate investor, many people need to remember what is what like before they became a "big shot" and go back to their first grade manners. "Thank You and Please" is just the start.

If it has been a while since you ended every sentence with "Thank you", and started it with "Please", two thoughts:
1 - Let's start practicing now, and
2 - Pick up a copy of John Maxwell's Winning With People

Tell me what you think -> Please give me feedback at http://www.realinvestors.com and in the Forums look for Today's Blog Post: "Soilet Green Is People..."

"You're Fired!"

BE WARNED: This morning's post will probably offend you (at first) if you belong to one of two select groups. Before you flame me with emails, you may want to print this one out, read it a couple of times and think about it. If you are still "ticked", go ahead and torch me :)

o.k. - now go to the bathroom, look in the mirror and say it: "You're FIRED!" You are now officially empowered to begin the process of firing some people out of your life.

Yesterday I spoke about not confusing activity for progress. Well today lets talk about this super-unrealistic notion of needing to "please everybody". And no, I'm not talking about going out of your way to be mean to people, step on ants, or pull the heads off the toys of little children - but I am talking about being firm and taking control of your life.

One of my favorite things to do is to work in the garden. A couple of years ago I created an outdoor room by planting some crape myrtles around the patio - everyone who comes over compliments them. But in order to get the desired effect every Spring and Fall I have to get out the sheers and cut off the new growth. I do this to create the look I want, and so the trunks I want to grow big and strong can. The same is true for roses, grape vines and your business. Every once in a while you have to "prune it up" a little, so what is left will grow big and strong.

As a business owner (which is what successful real estate investors are), you have to not only be prepared to fire some of your employees and vendors, but the same is true of your customers.

Yes, Customers!

Now there are two ways to fire anyone, including vendors and customers. Both are correct. And to get my point across, let's look at the man who has made "YOU'RE FIRED!" a household word, The Donald.

If you know anything about the APPRENTICE, you will probably concur that the way Trump fires people early on each season is different then at the end. In fact, the first "You're Fired" and the last one are very different, indeed. Let's look back at Season One, the easiest "You're fired" was the first one - David Gould - "Yeah, that was Easy!" ... and you thought it was Sam. David “who?” EXACTLY! Never been heard from since. No regrets, no remorse - simply GONE.

So, let's get to the "Sherman ticking off two groups of people" part. I have noticed that there are two particular groups of people who will find my philosophy on this topic difficult to accept: Women and Entrepreneurs, and if you happen to be both, I know I will be hearing from you later this afternoon - bring it on ;)

Society tells men to "tough it out", no matter what the situation, no matter what the emotions. Guys are raised to be "tough".
And have you ever noticed that only guys use lines from the Godfather Movies when talking about life and business: "Its only business, don't take it personally... we're taken it to the mats... Joey, Joey..." You with me? Women never use lines from the Godfather and women hate to "burn bridges" - the same can be said of Entrepreneurs.

Where in the world did we ever get this silly notion that we are not suppose to terminate relationships, and in some cases, as Burgess Meredith said in Rocky II, "permanent!"

Ladies, have you ever been on a date so bad that you came home, went on the internet and Googled "Convent"? And the really sad part was as soon as you walked in the door, you threw off your shoes on the way to the computer, and he had already left three messages. So the next day when you made the mistake of answering the phone, and it was him. How did you respond when he said, “I’d love to see you again – soon”. Did you tell him what he needed to hear, and you needed to say, or were you “nice” ? So, tell me what grief could you have been spared, if you had simply gotten out the blow torch and let it do its job!!??

For some reason, guys just don’t seem to have this problem. They tell it like it is, that is until they become Entrepreneurs. Then they too want to be loved, especially by their customers, even the ones who are two parts human and three parts leech. NEWSFLASH: Not everyone is going to “LOVE” you. So, get over it! Learn how to fire people, out of your life and out of your business. YES, including customers!

SO do you “torch” every bridge – no, not all!

Again, let’s look at Trump. At the last Episode of Season One, Donald had to make a choice: Bill or Kwame (truthfully the choice had been made long before the last episode) and in the closing moments, Trump looks at Bill and says: “You’re Hired!” O.k., so what happens to Kwame…??? Six weeks later he’s flying down to South America at Trump’s invitation to be a judge at the Ms. Universe Pageant. So what’s up with that – I thought the guy got fired??!! Yes, and no. Sometimes “you’re fired” means, “This is not working, and we need to do something different” and you leave the door open to try something again later in the future.

The challenge of being an Entrepreneur (and a woman too, I suppose) is knowing when to torch the bridge and when to leave the door open to try again. In either case, getting good at firing people out of your life is something you need to work on if you have any chance of being both in control and productive.

As a real estate investor and Entrepreneur, you are going to bring many people into your life and onto your team. You can not avoid this, investing is a team sport, and if you are going to win, you must build your team. Some folks you’ll keep, and many you wont. Your business is your garden and the sooner you take to pruning it, the faster and stronger it will grow.

"...Never Confuse Activity for Progress!"

Its Monday all over the world - or at least in the U.S. and thousands of people are heading off to work, to get some rest.

"get some rest...???" Yeah, its true!

You know I simply don't do Mondays. Started off when David was a baby and I wanted to spend the day with him. Now he's older and Clare tells me that "getting up when the sun is warm is not an acceptable habit for a first grader...", but I still don't do Mondays.

Anyway, this morning I had a chance to catch the Today Show's piece on how "hundreds of thousands" of Americans now look forward to Mondays, so they can go to work and get some rest from their "hectic weekends". The report went on to say that stacking your calendar full of events is some type of new "badge of honor", more glamourous than a big house, or boat. Go figure...???

Nonetheless,

I remember as a young "budding entrepreneur" one of my mentors, you have heard me call him "My Rich Dad" before, Marc Fried had a saying that is still stuck in my head. Every time I put too much on my plate, Marc would say: "Sherman, never confuse activity for progress!" He, once again, was 100%, spot on correct.

It is way to easy to think you are making progress on your life's journey by simply shoving more stuff onto your "To Do" list.

The reality is that mankind was designed to do best when confronted with challenges, which must be overcome. Maybe this is exactly what G-d was speaking of in the book of Genesis, when He spoke about the "toiling with the ground" stuff. Today, there are very few people who make their livings by farming, but that does not mean that we do not have to work and over come challenges to feel "accomplished", as well as to accomplish. The problem is, it is way too easy to believe that simply "tilling the soil" is in of itself "progress". If we were to look at a farmer's life and compare it with our own, we may see some things that would be shocking, to us the farmer looks "crazy" for getting up at "O'Dark Thirty" every day (save Sunday) and working the field, overcoming pestilence and foul weather and the occasional flu bug simply to bring in a crop of corn in the Summer and Soy beans in the fall. But now let's look at what the Farmer sees:

We too (some of us) get up at "O' Dark Thirty" and take on a list of tasks, of which maybe 10% are our priorities, and the remaining 90% simply given to us by a superior, who is not really sure "why", and because there may be little to no meaning in our lives, we then begin to fill up our "To Do" list with things which sound good at the outset, but have little any connectivity or continuity. In other words, we choose to be busy, to "be busy". This event, that event, here a little, there a little - no cohesive plan, just activities - and lots of them. We think we are making progress, but this is what the farmer sees:

On "Monday they got up, spread a little fertilizer on top of the weeds, then got out the tiller and tilled up the ground. on Tuesday they planted seeds for pumpkins, but the pumpkins will probably be too early and they will not get a fair price because no one buys pumpkins in July. On Wednesday they went to town to buy corn seeds, only to find out that it was too late in the season and all the corn seed was gone, so they bought Winter Wheat, even though it can't be planted until October and 1/2 will probably go bad or get eaten waiting in the barn for the next six months. On Thursday they realized the mistake they made with the pumpkins and were able to fix it by ordering corn seed online and paying a premium to have it delivered within 24 hours, figuring this out took several hours out of the day. On Friday they tilled up the soil they planted on Monday, and then went through by hand to pick out the pumpkin seeds, which had started to sprout to make sure the pumpkins would not be in the way when it came time to harvest the Summer Corn. On Saturday they did all the "Honey Do" list stuff, and on Sunday they sat down and did the books (n time for Church, or rest) they were suppose to do on Friday, when they were out in the field planting the corn, which should have been planted last Monday. It's now Monday again, and its time to start in on the other field -> here we go again - Whee!

The truth of the matter is:
1) We all take on more than we should and in the process "Confuse Activity for Progress";
2) We all need a day "just for ourselves!" G-d got it right, a day of rest is for our benefit, not his.
3) We all (from time to time) take on things we should not (learning to say "no" really is a good thing). If we take the time (up front) to figure out what matters most, then build our life's "work" around it, we will be more productive, more "balanced" and the things we take on will have more meaning, because the reduced number of things we do will be done and done right.

p.s. In case you were wondering, yes, I am talking to myself ;) I too need a reminder from "Chairman" Marc, never confuse activity for progress...