I read an article yesterday that Walmart has starting to put health care clinics inside the SuperWalmart. That is a great idea. I can deal with cheap health care while I am getting my oil changed, my wife gets her nails done and I can make deposits in the bank all while picking up some slave labor manufactured underwear and apple sauce. I believe Congress should disband and turn over the Federal Government to Walmart’s Board of Directors. Grant them full authority to run the country. Within 2 days, the healthcare crisis would be solved because Walmart would find a way to make money at it. Surgery could still be done in a hospital but there would be a ninety year old man waiting for you in the OR sticking a yellow happy face on your hospital gown before you went under the knife. As you left, another middle aged craggly faced person would ask you if you wanted your excess parts and organs in a paper or plastic bag. I know that we would give up some progressive rights like child labor and women’s rights but I am ok with that if I can get my health insurance to be less than $10,000 a month. What is a little child labor amongst friends? AH 

A distinguishing characteristic between living and life is passion. Merging passion and vocation should be the goal of every young person. If you are not excited about starting the day then you lack passion. Men are not passionate anymore unless it is sexual. Society has reduced men to feminized eunochs lacking the burning desire to win, conquer and lead. I want to “suck the marrow out of life” by attacking every task or obstacle with reckless abandonment. I want to be passionate about the tasks in front of me and the hope of building something lasting for those coming behind me. Kill me if I am just going through the motions in the hopes of getting ahead even though I have no desire or fire in my belly. Maybe that is when God takes us home. In Genesis, Moses records that God breathed life into Adam. I think God breathed on a spark implanted in Adam to ignite the flames of passion in every subsequent human being. When that flame flickers and wanes in the winds of life, we have to be careful not to quench the oxygen feeding that flame by cutting off the supply due to complacency and mediocrity. Kaizen!!! Men should be crying out for the flames in our souls to burn so intensely that the people around us catch fire too or burn up. BE PASSIONATE!!!! You only have one life to live. AH 

I have agreed to speak at an academic awards banquet on May 19th at my high school. At 5:05am, I was struck with what I would like to say to these young achievers. I want to tell them that most of the information that they have learned is useless. All the studying they have endured of math, English, dates, concepts and history is useless in and of itself. Have you actually learned from it? That is the question I want to throw in their face. Have they learned that their parents are probably right or have they learned that their parents are completely wrong?In other words, if you have read Shakespeare’s Hamlet and you know “What a piece of work is man” as a quote but you don’t know what Shakespeare was really talking about then you have missed the point of learning. Studying for a perfect SOL test or a 5 on the AP does not prove that you have learned anything. Shakespeare, Galileo and the other masters of the past explored uncharted territory trying to give us a map to answers that although feeble yet brilliant are merely suggestions to questions only God answers.  If the student has learned the old answers but is too scared to come up with new answers then the student has achieved conformity and nothing else.I would also like to tell them that they should be careful not to consider high school the peak. It is really just the start. It is up to them to formulate a new dream because the sand in this hour glass has emptied. Learning something about yourself and the world around you every day is the best remedy for taking your life too seriously. At 5:07am I realized that talk would be too existential.  I should just read a Dr. Seuss Poem and eat my chicken slyly holding inside my head the irony of life.  ”What a piece of work is man.”AH 

Business has a fine line between emotionless action and dynamic production. This line must be clearer the more employees in the business. Employees require the predictability of systems so that time wasting indecision is eliminated therefore increasing profitability. Owners should create predictable outcomes given a future set of scenarios which allow for quicker decisions to run the business more efficiently. Another systems by-product is the affect it has on the employee’s feeling of empowerment and ownership in the overall purpose of the business. If an employee does not know the next step or if the next step changes on a whim then gross inefficiencies are created within an organization. An employee is left impotent and disengaged about his or her contribution to the greater good. Systems should allow for intelligent decisions to accomplish the ethos, pathos and purpose of the business without yielding to the “This is the way I do it” entrenching of employee entitlement. Systems should yield a clear path from start to finish while integrating all the necessary parts of your business from the receptionist to the janitor.  AH 

A 1950 industrial age approach to business has gone by the wayside. Businesses that have stayed in the “Build it, Sell it, Repeat” business model are not going to make it. Blockbuster is a dying business model because they own it, rent it, repeat has led the way for a better more convenient model to surpass them via the internet. Blockbuster is trying to integrate the model with new technology but you have to ask yourself if Netflix’s cache, ease of use and internet dominance will drive the last nail in the Blockbuster coffin. Diversification with partners at every level of business creates a mosaic of business opportunities that rise and fall depending on the changing marketplace. Partnerships allow businesses to make the adjustments quicker by using the resources of a more specialized party to reduce the learning curve on a required innovation. Partnerships are the insurance for business in the 21st century.AH 

You have heard of the phrase other people’s money but what about other people’s equity. Money can be hard to obtain from sellers or lenders. Equity is money that has not been transferred into cash. Sellers are more likely to give up equity for cash because equity is an intangible for many distressed sellers. The key to obtaining OPE is speed. You need to be able to move quickly to fill the Seller’s need for liquidity. Here is a technique in a slowing or downtrending market that I have used in the past which might yield a powerful win/win for both parties in a transaction.You identify a house with substantial equity but very little prospects of selling at the current asking price. You approach the Seller to discuss the possibility of a joint venture. You take over the payments and move the seller out and become a co-owner on the deed. You tell the Seller that you will give the seller a portion of the equity now and take over the payments until the property sells. The Seller agrees to give up a percentage of the equity to you for taking over the payments and the remainder of the equity is divided 50/50. For example: House is worth 250,000 but the market selling time is 12 months. Equity is 100,000 and the house payment is 1400.00 PITI per month ($16,800 yearly). You agree to give the seller $10,000 and take over the house payments. You have them agree that you will control the selling of the house. Seller agrees to divide the equity as follows:Buyer receives the 10,000 plus all payments of $16,800 back at closing.Seller and Buyer divide remaining equity 50/50.  You make the decision to drop the price $30,000 to sell the property quickly thus eliminating $8,400 in payments which gets added to the overall equity for the Buyer and Seller to divide. After commissions (if you use an agent) and costs your net equity being divided is as follows:Sales Price 220,000 less $15000 (costs and commissions), less $18,400 ($10,000 to Seller and $8,400 payments) to Investor less payoff of 150,000 equals net equity of $36,600 divided 50/50.$18,400 cash back to you as Buyer plus $18,300 in equity equals total of $36,700. That is a 99% rate of return on your investment in 6 months (profit of $18,300 divided by $18,400 investment = .994).Seller receives $10,000 in cash from you and $18,300 in equity returned for a total of $28,300 in 6 months. The Seller made $28,300 and the Buyer made $18,400 from OPE.  Not a bad way for the Seller to hedge the risk of cash crunch and to manage illiquid equity. AH  

Banking on the rigidity of a bank is important. One of the most successful techniques for a real estate investor is to create a cash out refinance on a piece of property. I like to buy property no money down. Learning how to do this is information for another post. Here is how it works. You have your banking relationship and now you are getting ready to take title to the property. Before the old seller signs a deed over to you, you ask the seller to sign a deed of trust to a company that you control. This deed of trust is recorded against the property prior to your deed going to record thus creating a second lien on the property for the amount of equity you want to cash out. After the documents are recorded, the bank will typically allow a refinance for up to 80-95% of the cash value of the property. The refinance pays off the old first for the seller and the second to your company thus cashing out of the deal. Make sure your new loan does not create negative cash flow and always leave 20% equity in the deal. AH 

Over the next couple of weeks, I am going to start posting about real estate transactions. The first set of posts are going to be related to managing bank relationships. I know that most investors avoid banks because they have bought into the hype about the importance of being ananymous. As a lawyer, I believe it is more important to do what is right, accept the fact that you are going to get sued and prepare accordingly. Bank money is usually provided at decent rates, predictable terms and average loan to value ratios. Your personal guarantee should not be a problem if you are person of integrity. I am not saying that you should avoid other forms of financing but you should start with establishing a good relationship with a local community bank. I have 5 community banks that I do business with and all of them provide great customer service and better then average terms.Here are 10 things to do to establish a banking relationship:1. Spend the money and time to have your accountant prepare industry accepted financial statements and have them updated every 6 months.2. Prepare an asset sheet with liabilities to provide the bank a clearly defined net worth, cash on hand and debt load analysis.3. Have your tax returns for the last 3 years scanned into the computer so that you can email them to the bank quickly. They are going to move them around internally and paper gets lost.4. Always maintain a cash reserve in a mutual fund or other liquid vehicle to prove reserve funds but never use that money.5. Never take out second mortgages on investment property.6. Provide a written explanation of your tax return if one of the most recent years has something abnormal on the return.7. Ask for more than you are going to receive.8. Ask the personal banker the types of deals they are looking for before you ask them for something. 9. Try to establish less than 75% loan to value in your deals that you take to the bank.  (I will teach you how to limit the cash out of pocket later)10. One deal at a time. Do not try to take down multiple deals with a new bank. Do one, close it, make 3 payments and then inquire if they are willing to do another transaction.AH 

Lawyers are notorious for not returning phone calls timely. There are a lot of excuses for this shameful stereotype but the reality is that it is true. I am constantly working on this with my associates and staff. I believe we are better than when I first started practicing. I have called attorneys and I have not received a return call for 2 weeks. I would expect a staff member to call and say, “Hey uh Mr. ? does not really want to talk to you so I am calling to let you know that you are not important enough in his life to call you back timely. Good Luck, Thanks for calling. Ms. or Mr. ? Assistant to the Attorney to important to call you back.”Truthfully, I know that there are some clients that I don’t call back because I need to fire them.  I don’t want to deal with them because I  am a coward.A distinction that I have used to train my staff is the difference between communicating and informing. Communication requires the tone, inflection and melody of a human being’s voice. Informing someone is an act of transferring data from one place to another using various methods such as fax, email and voice mail. Clients will not get irritated if you make the distinction clear and properly identify what the situation requires. Remember that the client’s expectation must be set around how the business will be communicating and informing the client.   Here are some tips:1. Information such as confirming a time, date etc. does not need a voice call.2. Information such as a request for a fax or copy of something does not need a voice call.3. Requests for information should be done via email and fax if possible so that you have a record.  3. NEVER EVER EVER GIVE BAD NEWS TO SOMEONE IN AN EMAIL IF YOU ARE GOING TO BE WORKING WITH THIS PERSON IN THE FUTURE.  CALL THEM ON THE PHONE. 4. IF YOU ARE TERMINATING THE CLIENT BE CLEAR SEND A LETTER NOT AN EMAIL. 5.  Call someone on the phone if an email or fax is not clear to you and ask them to explain it to you by asking pointed questions about the document.  AH 

Time is the most precious thing in business. As busy business people, the one constant is time. What I mean by that is that everyone has 24 hours in a day 365 days a year. I have 24 hours and you have 24 hours. A technique that I use daily is the phone conference. A phone conference is a predetermined time in the future where two or three people initiate a call about a specified topic. Voice mails if used improperly could possibly be the most painful invention of the century. If I receive a voice mail that says,  ”A please call B back. Thanks.” What is the purpose of that stupid message? Wasting my time to have to make another call in the future. Use email if I am not answering my phone. There is an exception to this rule. Friends. Not a problem. I want to call them back but if a business person says call me back and I am now aware of the nature of the call I am setting myself up for failure. NOTE TO SELF - USE A PHONE CONFERENCE. This phone meeting allows four important things to be accomplished. (1) You stop playing phone tag. (2) You control the length of the meeting. (3) You can prepare for the call so it is more productive. (4) You can avoid unnecessary conversation because all parties are in agreement about the expectation of the call. Try it.AH 

SOMEONE HAS TO DRAW THE PLANS   

In our fluid liquid on demand society fortresses seem out of place. However, the institutions that built this fluid liquid society were fortresses of commerce, government and education. The internet started by the military to communicate. Educational institutions provided intellectual environments as a bedrock for the necessary trial and error to create all of our modern conveniences. Layers upon layers of successes and failures performed in safe environments so intellectuals could venture out and then return to the safety of the fortress. These fort builders created plans first then decided on materials and then built. No microwave meals. No pop in the microwave push a button and 15 seconds a meal. Preparation, planning and perseverance are the ingredients for a great fort. Have you taken the time to plan out the type of fort you want to build or are you hoping that the tent that you are currently shivering in will be strong enough to build a life on. Maybe you should think about sitting down to build a legacy by becoming the architect of the life you want instead of the life you have.

Are you ready to prepare, plan and persevere?

If your home is not a fort where you, your wife and your kids can venture out into the world exploring and conquering things all while knowing that they can return to the fort for protection, training, and provisions; then you are gypsy tent makers declaring permanence but constantly on the move.

If you don’t know how to build then find a master builder and apprentice for a time until you can build on your own.                                                                                                                                                                                                                         

ANATOMY OF THE FORT – SIMPLE BUT EFFECTIVE                                                                                                                   A traditional fort has four sides. On the four corners a tower was usually built to house guards or sentinels. A sentinel‘s job was to watch the horizon for danger. If the sentinel saw a stranger or a dangerous situation then the sentinel sounded an alarm to warn the inhabitants of the fort and call the people outside the fort to come back inside the protection of the fort.  All sides had to be watched. In our families the four sides of our forts are:  

1. Financial/Occupational
2. Emotional/Spiritual
3. Intellectual
4. Historical/Traditional