A Critique of the New Book “Zillow Talk” A discussion about the Starbucks Effect, Gayborhoods and More..
Real Estate has been influenced by a lifestyle shift according the newest publication by Spencer Rascoff and Stan Humphries
Speaking of lifestyle shifts, let me get you up to speed on what’s happening around here.
-The other day I decided to join a CrossFit gym.
The best part? I work from home and can go as often and at any time that I want. Not trying to impress you, just trying to impress upon you the freedom that is available to all of us. Learn More.
Back to crossfit.
I went in there and everybody was pretty much beast. This is what I saw when I walked in. Hey I wanna look like that. It was pretty inspiring so I joined immediately:
It kinda reminded me of how the real estate investing dealio goes. You walk into a seminar and wanna be gazillionaires like the rest of the folks in there. The only problem?
You didn’t see how they got there. Now it’s your turn to go through the pain. Like the old saying.
Everybody wants to go to heaven, but no one wants to die to get there.
I thought this would be really good for me to be able to work out and get my @ss back in gear.
While I was there, it dawned on me that I needed to go pick up a book from Books-A-Million for my son’s summer reading requirement.
I figured it was a good opportunity to look for some new stuff on real estate to see what kind of hooked bait they’re selling now.
Guess what I found out?
Besides the fact that Books-A-Million offers one of the best Pumpkin Spice Frappuccino’s in existence today, which definitely rendered my crossfit crushing activities useless.
You probably know….
But I’ll tell you anyway. I strolled up and down the aisle looking for real estate books, and I found the same books that were out 10 years ago. They are still being sold. Say what? A lot has happened since then.
I just wanted to do some book reviews for you guys and very quickly recognized that there isn’t much new material out there.
Why is this? Well, there could be a couple reasons for it. Either, people simply are not investing in real estate as a side hobby business anymore, or the market has simply been so crazy that really nobody knows what the hell’s going on.
I personally believe that the reason why books are offered in the book stores is because revenue generating marketers determine what is selling in their stores and what isn’t. Ok, no brainer… but/and It’s all about demand.
Guess 50 shades of Gray gave real estate books a real smack-down this summer.
BAM executives know what sells and what doesn’t. Real estate is gone through so many major spankings over the last years that it’s kinda natural to fall into the void of new info on the subject. Maybe people aren’t as excited to get into the real estate investing arena.
Or…door number 3 might suggest that the market is online and not in the bookstores these days. People are looking for more interactive learning.
But we are already back to my Big Beef:
The thing is; the real estate market is so vast. You really have to be good at all kinds of levels in order to be successful.
You have to know the market you’re going after and what’s going to play a role for you and your business when you jump in. You probably suck at it. And to “un-suck,” you’re going to need tons of education which is going to cost you big time. As I research most of the seminar programs, they are designed to lead you to the next one and before you know it you spent $15,000 – $20,000 to become a newbie investor.
Yes, you might shed your baby teeth after spending all that money, but the idea and concept of no money down is pretty much bullshit. At least that is what a lot of people who have lost their butts say.
You got to be a really good negotiator in order to pull it off right and to repeat the process successfully.
You see the problem is you need training and education. The only way to get it is to work with somebody that knows. However, if you’re working with somebody that knows, then you must realize that the reason they get paid is to train you. For them to sustain their business they need to keep you in training for as long as possible.
This is the part that matters.
Once you are in, you can’t recognize the forest for the trees. What are the seminar leaders and people selling you over and over again? They are selling you “hope.”
They are selling you on the possibility that you might make money in real estate. I would gather that there are many people just like me who ended up losing everything because we were strung along with the idea and hope that we would make a ton of money and a fortune that would be a game changer for us.
I mean think about it. What do you have to know in order to be a shaker and a mover in this industry?
- You’ll need to know investing 101. That is how to make money on your money. You’ll need to have negotiating skills in order to close deals with buyers and sellers.
- You will need to know how to flip a house. You’ll need to know how to improve the landscaping, the interior, the exterior, and make your product irresistible.
- You will need to know how to calculate the cost of the flip. You will need to know going into the deal how much you stand to gain or lose. Most of the time I found that you expect more profit than what you get out of it.
The reason for this is simple. It is simply blind human nature. We tend to believe that things will be easier than they really are. I’m currently reading a book called 10 X.
The guy that wrote the book tells a story how he started his business and had calculated that he would be at the same income level as he was at his job within three months of starting his company.
But! it took him three years.
As a side, the reason he wrote the book was because he explains that most of us underestimate the challenge ahead of us. We stand on one mountaintop and believe that it’s only a few miles to the next range of mountains. It isn’t until we get on our way in the journey, that we recognize that we have bit off more than we can chew, and the next mountain range is a real journey.
The problem then becomes that you were so committed at that point that you can no longer turn back. There is just too much to lose.
This is exactly what happened to me once I bought my first investment property. Before I knew it I was knee-deep in the wrong type of drywall, having to pull it all back out and replace it to pass inspection, and a crew of framers that didn’t show. (That was because the whole crew has been thrown in jail LOL…a story for another time).
You name it I didn’t expect it. You would think that I would be smarter and wiser for the next project. The problem is, I was smarter, but each project brings a whole new set of problems.
You may think that I am just down on real estate in general, but you would be wrong. I am down on the part where people say it’s super easy and don’t tell you the amount of work and effort that it takes in order to be successful and the risk that you put yourself into in learning the process.
That is what I’m down on. I don’t think enough people are out there letting us know the downside to this business. There’s not enough people that will tell us honestly about what can go wrong. That is why I have this blog in place. Now, you can decide to listen to me or try it on your own. I’m OK with either. The reason why I’m OK with either option is because I know you will learn something either way you go.
With all that said, I must be a little bit of a glutton for punishment. I still believe in the real estate market but with some serious, major, safeguards.
For the average Joe however, I think it’s a huge mistake. That is why I would definitely recommend staying out of it if you can or unless you have a ton of money.
Let’s talk about the book though.
The book is called Zillow Talk. A few items in the book that were really fascinating was what I kind of lead with (at the top of the story) which was Starbucks actually can influence the value of your property. You probably could make a business out of that. Just go around and buy houses that back up to a Starbucks. You know… the ones that are within a four minute walking distance to Starbucks or something like that. I think people might actually jump for that.
The bottom line is that there are major shifts in how people buy their real estate these days. Not everybody’s going for the Mac-mansion. I think there is much more social relevancy to what is happening in the real estate market these days. For example in the book the authors talk about gay/lesbian bisexual and transsexual neighborhoods (which the book coined “gayborhoods”) and how they influence people to buy in certain neighborhoods.
These kinds of things actually matter these days. I feel like it’s social media for real estate.
Okay, let’s really dive into the review.
Different than what “Rich Dad Poor Dad” taught us | What Starbucks has to do with Real Estate Investing
Maybe you read Robert Kiyosaki’s book too or one from his trusted partner Dolf De Roos. Either way, I don’t remember them ever mentioning Starbucks, and for that matter, blue collar investor Ron LeGrand probably couldn’t give two you know whats. But the results are startling.
The Starbucks effect??
Since when does Starbucks have any bearing on the value of your real estate.? Well apparently it can. The factors that are influencing today’s real estate pricing and values have changed. It’s a new game. At least that is one of the major takeaways from the book.
To be honest, it made me cry a little on the inside to learn that the whole Starbucks phenomenon is really true and backed with some serious data.
As a society I think we’ve become addicted to this little store. All along they have been selling us the same stuff year after year and we simply pay more and more for it. Kinda sad.
Either it’s an indicator that our economy has gone completely to crap or we’re simply crazy in love with the Starbucks brand. If the latter is true, it makes you really wonder why.
Did you know that they employ all kinds of psychological planning into these stores? Have you ever noticed that it’s just great being there?
Yeah, me too. I’m guilty just like you but my café latte macchiato frap blast has to take a back seat right now. At least when it comes to buying real estate. I’ll revolt on the outside but consider buying in such a manner on the inside. wink.
Oh and I better mention:
(Just as a refresher in case you don’t know who Zillow is. Zillow is a leading aggregator of information regarding real estate.)
Of the key cool points of Zillow’s book was the concept of “gentrification.” When I first read the word I felt assaulted by my college honors English teacher, but in the book they explain it pretty well.
Big Word of the Day: Gentrification is simply the process of how an area develops from let’s just say poor to middle or upper middle class. You can read the book for all of the details, but suffice it to say that it is very possible to sit down and speculate what areas of growth will be the next hot centers in the real estate market years in advance. Often you can determine this even 10, 20 or even 30 years in advance.
There are three core concepts to consider:
1. The area must have older homes
2. The area must be primarily rental and not owner occupied properties
3. The area must be close to where the action is.
If you can nail down all of these three items, then you can speculate pretty well according to Zillow’s research. The way that the real estate market flows is simple.
It follows a pattern. Here’s the path. An area is pretty poor and most people rent there. So you have a major influx of people that don’t have a whole lot of money but are down with the vibe of the area if you know what I mean. They call their friends and tell ’em what’s going on in the area and so they move there too.
Soon, businesses, bars and other lifestyle attractions sprout up to accommodate the new demand. The vibe increases and then some of the “gentry” decide to join the area and start driving the price up.
This is the core concept that they talk about in the book.
But I say, heck with 10, 20 or 30 years down the road. Why not own a digital asset that is income producing just like real estate except that it doesn’t require all the upfront cash blow.
The barrier is relatively low to entry and it isn’t saturated because most of us don’t even know anybody else that does internet marketing successfully..