Intro - Financial Freedom Through Free & Clear Real Estate
Relationship Referral Network
Predicting the Cycles of Real Estate
01 Intro - Financial Freedom Through Free & Clear Real Estate
My name is Kenn Renner; Iím an Austin, Texas real estate broker. Thank you for coming out. These seminars that we put on for Amplify Credit Union are all put on for free. In other words, we donít charge anything. This is information that youíre not going to get at a college course or university. What youíre going to get at Amplify University are professionals who have been in the business for many, many years. However, this is a very expensive seminar and the reason why I say that is because you took your time to be here. If you multiply everybodyís time on this Saturday afternoon by the number of people in this room, this is a very expensive seminar. And so we want to put out as much wisdom as we can and hopefully, down the line, we can establish a long term relationship.
We notice that a lot of people are Amplify members. Let me ask a question: How many people here are not Amplify members? (Hands raise) Oh, great, great, great. For those that are not Amplify members, weíre going to lock the doors and make you open up an account before you leave (laughter).
Alright, just a quick resume for me. Iím an Austin area real estate broker and this is my 25th year in the business. Iím 44 years old and I bought my first home when I was 19 years old and it scared me to death. But since then, real estate is all Iíve done in my professional career: help people buy and sell real estate and purchase real estate myself. And since 1983 when I got my first real estate license, Iíve closed over $200 million in transactions. Thatís a lot. And $80 million of that came in the last 3 years, so that puts me in the top five in the whole entire city or Austin as far as real estate sales are concerned. But where I came to the position to be able to do that kind of volume was through public speaking events like this, teaching people about the cycles of real estate and how to position themselves to benefit during the cycles and also the tax benefits and the other ramifications involved in the real estate realm. But one simple thing that I took seriously was something my dad told me. He was a real estate attorney before I got into real estate, and he said, ďAll you have to do is know finance and real estate. You stick with that and youíll do well.Ē So thatís what I did. I took that advice and itís been very good advice. But what I really did was look at the Rich Dad, Poor Dad, a true life Rich Dad, Poor Dad scenario that we had in my own life, and one of them is my real estate attorney dad who bought a home, the first home I remember, which was in San Mateo, California. He paid $22,000 for it in 1963. Right now that home would have been free and clear 10 years ago. We like free and clear real estate. Thereís a forever debt thatís paid off when you own a home free and clear, but Iíll get into that in a second. Just that one home, even with the California recession, would be worth $1.5 million today and it would have been paid off 10 years ago. So then I started researching, I had some fun; I went and started looking at some of those price comparison websites. I remembered every house that my dad had bought and sold, bought and sold, whether we rented it or moved into it. And what I found as I added up all of the value of those homes now, even with the corrections of the market, that his net worth would have been $5 million, just from the homes that I remember living in. So real estate goes up and down, but over time, it always has the tendency to increase over time. What you have to do is buy when the opportunities are right, when people are selling and panicking. And you sell tax deferred so that you defer capital gains. One of the other things that I was taught, and this was a revelation, that there is a way to avoid taxes, and itís through a stepped up basis. We have a series of seminars that we put on and this oneís going to deal with buying a home in a tight market because thereís opportunities to buy and a right time to buy, and thereís also opportunities to sell and a right time to sell. One of the real estate seminars that I do is real estate investing. Iím not going to teach that on this particular one but talk specifically about buying and selling needs right now. What do I do with my home? If Iím going to sell, how do I get the best value for it? If Iím going to buy, is now the right time to buy? So weíre going to go through these steps. How many right now own their own home? (hands raise) Ok, so we got a majority. How many own investment property? (hands raise) Ok, so about a third. How many are happy with their investment property? (hands raise) Ok, about two thirds of you investors.
02 Relationship Referral Network Transcript
Letís get started. Iíve been doing live speaking since 1994 and one of the first seminars that I put on was how to buy your first home. And because it was a very under serviced market when I came to Austin in 1994, we put this seminar together because nobody was teaching this stuff. A lot of people ask, ďWhatís my reality going to look like in 10 or 15 years?Ē What we do is we dream a little dream. One of the things that they teach me in motivational seminars that I go to all the time is draw your dream home. Draw your dream home in detail. And then what happens is once you have a dream home in mind, you have to set goals to get there, you have to make plans just like anything to achieve any other goal, and then it becomes your reality. You kind of break it down. I also do time management and goal setting seminars. What you want to find in dealing with a professional are these three things: service, expertise, and integrity. Thatís the foundation of our business, the triangle that I have is service, expertise, and integrity. And if youíre lacking any one of those in the professional that youíre trying to hire to do a job, then youíre going to have a tougher time. So thatís the basic motif of my business: service, expertise, and integrity. And then the best compliment that you can get as a professional is a referral. I have a gentleman that bought a home from me in the audience and he was a referral from a cousin. Thatís the highest compliment that I can get as a professional, so thatís what I am looking for. A lot of businesses are almost 100% referral based or 90% referral based because once you get to a certain level like a doctor in expertise, you almost have to be referred to that doctor. And thatís where we want to raise the level of the real estate industry. Weíre not supposed to be sales people, we need to be counselors on the level of doctor, lawyer, CPA. Unfortunately, most realtors are taught to be sales people.
We base this whole thing in trust because in the recent past everybody had a website, every realtor, every financial planner, everybody. The people who have the best websites are the ones that got the most clients. Now everybodyís got a website. So it goes back to asking for a referral. When I look for a good attorney, I ask my trusted advisors who heíd use for an attorney. Why? Because I trust my advisors and I trust their judgment and so they refer me somebody that they trust. The acronym Iíve built here is TRUST. T for the foundation of trust. R for respect. U for an understanding of each clientís needs. Enough to get the level of S, where youíre secure with your professional with your private information, goals, and dreams, and T for tethering. And what I mean by tethering is would you throw the rope out to other people for your professional does a good job? As a professional, Iíve built a network of other businesses that I call of trusted advisor partners, that I call TAPs. Now, when you tap in to some one whoís been doing business for a long time with service, expertise, and integrity, you will be able to tap into their professional network of people. For instance, my property manager. You cannot go and call on this individual directly because his business is at capacity. You have to be referred from our company to get to our property manager that we refer. So itís important to know how you tap into these business professionals. This is the way business is going to be done in the future because, like I said, everyone has a good looking website. And this is how Amplify works. Amplify brought me in because I am a trusted advisor in my area of expertise and I have a track record to prove it.
03 Predicting the Cycles of Real Estate
I was able to a lot of this volume of sales because I was able to study the past and foresee what was going on in the real estate cycles of the market. And these cycles go all the way back to the 60s and 70s. I moved from California to here in 1993 because I saw what was happening in the market, similar to what itís doing now. As a professional in the real estate industry, I didnít want to ride a 5 to 7 year cycle down, which happened in California in the mid 90s. So I went somewhere else. I looked across the nation to find somewhere else that I could invest or buy a home and have a lifestyle. And through research Ė Money magazine and National Geographic, I saw all these newspaper articles and I said, ďYou know what? I gotta go somewhere that thereís an opportunity to make money.Ē Austin, Texas amongst others came to the top of the list and I got on an airplane to check it out and I got here as quick as I could and I didnít want to go back, my wife will attest. She said, ďI guess you found home.Ē So we made plans to move to Austin, TX.
In the study of markets and info sources, you have to look at where the news media is based out of. California, New York, the coasts. So when you get this information of the markets crashing from the news media, theyíre talking about Stockton, California. Theyíre talking about the Inland Empire. Theyíre talking about areas that are on the coasts. Cause theyíre right in the middle of it. There is no such a thing as a national real estate market. There is no such thing. What happens is when people canít make a living Ė like I was concerned about in the early 90s Ė we go some place where we can make a living. Thatís why you see so many out of state license plates right here. What does that do for our economy here? People buy homes, they move in, they fill up our rentals, supply goes down, and prices go up. So donít believe everything thatís going on in the national media and apply it to your local market. Now there is an opportunity for people like you that are ďin the knowĒ and have this knowledge. There are still people out there that own property that think the marketís crashing in Austin, Texas. Those are the people that you need to buy from. They are those panicking people. You know who most of my clients are right now? The people who bought investment properties from me two years ago. Theyíre back in California saying, ďI guess the whole marketís crashingĒ and I say ďNo itís not, the market is doing fine. Our rental market is stronger than itís ever been. This is the time to buy.Ē Itís time to buy when peopleís mentality is contrary.
So, California, back in the early 80s was kind of in the doldrums. But in 1980 through 1985, Texas was in a boom phase. But in 85 when the tax laws changed and Texas kinda ďshut their doorsĒ there was a depression, so to speak and then prices dropped. But what happened in California? Prices went up. There was a boom from 85 to 92. What I did was I saw what was going to happen and in California from 1990 to 1997, the mean price for a single-family home in Orange County Southern California was $195,000 in 1997. Thatís basically what it is here right now. What happened was there was a drop and I didnít want to ride that market down, of course. What happened in the 90s in Texas? Dell and the dot coms and we had a boom around the time that California was in the doldrums. This is continuing to repeat again. Thatís whatís great about following cycles. They have the tendency to repeat and they move slower than the stock market. The stock market is volatile. Real estate markets are like big ships they take slow turns. So what happened is, right now about 2000 we were flat from about 2000 and 2006. California went through the roof. And then in 2006, the values here started to increase. Did you have any problems with your tax assessment this year? Ok, everybodyís calling me, thatís why weíre doing the tax seminar. Later on today is how to protest your taxes because we want to cancel out some of that debt because the tax assessors have gotten greedy this year. Thereís no basis for a lot of the numbers theyíre coming up with. The values have gone up, but not the 20% they seem to have set on some of my properties. And the values are going up because why? People are moving here because they have jobs. They are leaving the coasts, they are leaving Phoenix, and they are leaving Florida. Those are the license plates we see and they are moving here. What do you think they are moving into? They are moving into residential property and they are either renting or they are buying. But most of the time they are going to rent first. We have 100% occupancy in our properties. The leasing agents are doing great right now because there are so many people moving here. Our occupancy is 97% and the 3% is probably properties that people donít want to live in anyway.
So opportunities are now to keep your eye out, take advantage of the sub prime mess right here in Austin. Later on, weíre going to talk about H.U.D. foreclosures and how you can swoop in and take advantage of good rental property. The time to buy is now because of tax benefits and the fear factor in the markets. But I have 30 something slides so Iím going to start ripping through this stuff.