This has prompted me to think about how the exchange of currencies affected contractual obligations. The only way to stay ahead of the curve is to look to history. I think that as prudent business owners and managers we should be looking to protect ourselves from the possibility that there are a whole group of people in New York and Washington, that believe it is time to do a “currency swap” and/or “end the fed” and some of those believe that it should be to a unified world currency that would be immune to exchange rates from the unified countries represented. I am not here to share my opinion on this, but I do believe that it could be in our foreseeable future and it is our obligation and fiduciary responsibility as asset managers to prepare for the possibility of a new currency whether it be in our own country or unified.

Ask yourself this question, what if the reserve announced that the dollar would cease to exist in 6 months and you now can exchange your dollars at the bank for the new currency. We have leases that refer to a monthly rent amount in dollars, late fees in terms of dollars, and any other amenity charges in the terms of dollars. Now if the truths that were perpetrated in the 17 countries using the Euro as currency hold true, there will be “continuity in legal contracts”. This means that a mean or baseline will be established that will rule when it comes to contractual obligations. But what if this does not work in the favor or fairness of the contract holder, i.e. the asset owner? What we know is that we can add language in our leases that afford us a little bit of control over the favor of the fairness. In absence of preparation we will be held to whatever the law of continuity is and it will be legal and binding on all of us. We must protect our interests. I don’t believe that this is imminent, but I do believe that we live in a world that is simply a butterflies breath away from catastrophic meltdown, and there may be no other choice than to do something drastic.

The next thing I am dramatically concerned about is what if inflation starts to run, do we have the ability in our lease to protect ourselves. I think we could be pushed into a situation of hyperinflation by the recent actions of the fed (simply printing 7.7 trillion dollars unknown to our government or any of us), or the actions of our current political climate, or this insane political season that we are in or any combination of the three. The question is, in the case of hyperinflation, where the majority of our expenses and cost of doing business go up dramatically overnight, what can we do to increase our revenue stream. Your resident that is paying $600 per month for his 1 Bedroom apartment, will find it a real bargain if he now is paying the same thing for a meal at Applebees or for a tank of gas. What if he just signed a 12 month lease with you and he gets this “bargain rate” locked in for the next year. Good for him, but not so good for you. If you don’t believe this can happen, look at the history of what has happened to practically every fiat currency in the history of the world. In nearly every case of hyperinflation in recent history (Poland, Germany, Brazil, Zimbabwe, Greece, and dozens more), the “tipping point” that signaled the impending event was when a country borrowed 40 cents of every dollar they spend. Today, the US is borrowing 42 cents of every dollar we spend. Look at food prices, which are up 34% in the last year, according to The Economist.

The one thing that is for sure in my humble opinion, the Federal Reserve cannot “print” our way out of this mess. It is the manipulation of the open market that has led us here and as with everything in the universe, it must “right” itself. We are beginning to see this in the housing market since the bursting of the housing bubble, we have seen it in the tech space since the bursting of the Dot Com bubble, and we now must see it in the currency space. Something must give, I think that we may see the dissolution of the Federal Reserve in the next few years, and we may see the reclamation of a gold standard to our currency. I think that as an investment manager, it is imperative that we protect our investors, and smart multifamily professionals will be watching closely for the “writing on the wall” and will be the early warning system for our owners and investors.

I didn’t write this post with the intention of scaring anyone, as with everything in the history of the human spirit, it has not killed us, but we should be prepared to enter into a very tough time to do business. I think that we should seriously consider our long-term strategies and really consider the “what if” scenarios.

I would love to engage in some thoughtful conversation on these concepts in the comments below. Many of you may disagree with some or all of these scenarios as being really potential, but we have been surprised by much of what we have seen in this short 11 years of the 21st century. Just one man’s fears – food for thought.

]]> http://noicoach.com/2011/12/05/hyperinflation-currency-swaps-death-of-the-federal-reserve/feed/ 0 http://noicoach.com/2011/11/24/thanksgiving-thoughts/ http://noicoach.com/2011/11/24/thanksgiving-thoughts/#comments Fri, 25 Nov 2011 02:52:27 +0000 Rich http://noicoach.com/?p=327 So it is the evening of thanksgiving, and I just returned home from my in-laws and in an effort to avoid a tryptophan induced coma, I thought I would share some thoughts meandering around in my brain.  It has been a tremendous year for me that started 4 days before Thanksgiving last year I suffered from a pretty serious medical situation, that landed me in the hospital and reminded me of my own mortality.  I have spent the last year seeing more doctors in 12 months than I have seen in my entire lifetime.  It really has served as an epiphany to me and I sincerely hope it has made me a better person.  I do now think about things in a much different way, and I try to keep things in perspective a little more.

In our lives it is times like these that make us step away from the path that we are on and look at all of the alternatives that surround us.  I have realized in a very short year that the life that we have is simply the life that we have chosen for ourselves, it is not what has been “ordained” for us and it most certainly is not pre-determined.  I look at the trajectory of the path that I  am on, and realize that the sheer force of life that is behind that trajectory is exactly what I want, dream, or know it can be.  I wouldn’t wish upon anyone to go through this realization only because of a potentially life threatening situation, as I now know, you can choose to stop for a moment and see all of the alternatives that you have.  Life is filled with choices and we make them with every breath that we take.

I have spent a lot of time this year thinking about where our society is headed, with the recent events in our economy, the uprising that we have seen all over this planet of ours, and the turmoil that our world is experiencing you could spend a lot of time worrying about what tomorrow will bring, or you could simply choose to focus on what today has brought for you.  I know some of you reading this may be experiencing one of those “down” times in your life, we all have lived through those times, but the key word is that we “lived” through them.  I think back in my life and can so clearly remember those times when I thought there was no way out only to find that the universe handed me a solution.  Being armed with this knowledge we can march into those tough times knowing that there is a way out, and that as the old saying goes, “this too shall pass”.

Nostalgia is a wonderful thing, it enables us to look at those toughest points in our lives and fondly remember what it was in our psyche that enabled us, we tend to forget about all of those things that disabled us.  Every time I look into the eyes of my daughter and feel the unconditional love that she gives to me, I can realize that every time I am down, it is usually a very selfish outlook that I am viewing the world from.  I truly do believe in the Law of Attraction, and I simply know that positive thoughts that are expressed outwardly toward others is one of the single best investments that we can make in life.  The return on investment is enormous and will pay handsome dividends for years to come.  I see an unlimited future for those around me and I will do everything within my power to make that future a reality.

I am so enormously thankful for everyone in my life, even those of you that may not like me so much.  You are someone who has come across my path and made me the person that I am today.  I am eternally grateful for each and every one of you for making my world better.  My Wife, my daughter, my extended family, my colleagues, my friends, and my supporters you have given me a reason for coming to terms with these feelings in a world that does not always appreciate or reward thoughtfulness.  Thank you for giving me something to be thankful for on this day that we have a moment to take inventory of where we really are in this life.

The “Perfect Storm” Leads to Six Reasons to Buy Silver

There is a growing body of evidence, ominous economic indicators and expert opinions that support the notion that Silver is massively undervalued.  If the storm forms on this foundation, we could see a silver and gold boom of unprecedented levels.  It is clear that silver is undervalued right now and there are looming economic conditions that simply will not permit this to continue. It is only a matter of time before silver must climb to its true value, as it has done time and time again throughout history.

Robert Kiyosaki (author of Rich Dad, Poor Dad) predicts that Silver is likely to go as high as $6,000 per ounce.  Other experts are not quite as
bullish, but are convinced we will see silver higher than $1,000 per ounce.  It is currently trading under $35 per ounce.  Are you positioned to take advantage of this boom and protect your assets? Here are just a few of the indicators that the price of silver is on the verge of an explosion:

Why Silver is the investment of the decade

1. Demand is not only up, but still rising.   In the months of January and February, the US Mint sold as many dollars of silver as they sold dollars of gold. The Chinese used to export 100 million ounces of silver – they now import 112 million ounces.
2. Supply and Delivery Challenges for Physical Bullion. Our market trades roughly 400 million(paper) ounces a day.  When Sprott Asset Management was preparing to open their physical silver trust they had difficulty acquiring 15 million real ounces. The US Mint recently advised potential investors that it can no longer coin the popular Silver American Eagle saying, “The United States Mint will resume production of American Eagle Silver Uncirculated Coins once sufficient inventories of silver bullion blanks can be acquired to meet market demand.”
3. Technological demand for silver is increasing. In 2010 industrial production of silver was up 18% due to rising demand from the
   technology sector. Among other things, silver is increasingly being used in computers, cell phones, and solar panels. Health care, alternative and traditional, is another market segment that will see silver demand increase because of silver’s antibiotic properties.
4. Silver is closing the margin on the gold-to-silver ratio. Historically, though not in recent decades, silver has traded at an average ratio of about 16-to-1 norm. It is currently trading at about 50-to-1, and just recently was trading at nearly 70-to-1. If the historical ratio of gold to silver holds up and gold is priced at $1800 an ounce, silver would then be trading around $112. If gold were to trade at $3000 an ounce, a prediction made by several precious metals analysts, silver would trade at $180 if the gold-to-silver ratio returned to historical norms.  None of these take into consideration supply vs. demand issues.
5. More (Paper/Fiat) Money. As the US Federal Reserve and central banks around the world continue to deal with fiscal issues through
   monetary means, more and more paper currency hits the global marketplace. As a result, more money is chasing fewer goods, with silver being one of those goods. For the reasons above, as well as the fact that there is more money available, the price of silver will continue to “inflate,” just like other hard assets. Over the last 100 years, since the Federal Reserve was established, the US dollar has lost 95% of its value. This is a long-term 100 year trend, indicating that the US dollar will continue to depreciate.
6. Inflation/Hyperinflation.  Inflation is often identified as the single biggest reason for why precious metals like gold and silver rise. During the 90′s the US experienced a period of boom with the evolution of the internet and positive economic outlook which led to a very bullish stock market.   Stocks were the primary investment vehicle of choice during this technology boom. Gold and silver took a back seat as it was commonly considered to be too “safe of a bet”.   As a society, we never gave much thought to hedging socio-economic crisis which, today, we may only be a butterfly’s breath away from.

After the Dot Com Bust of 2000, September 11^th, the resulting Iraq War and other Middle East events, multiple natural disasters such as Hurricane Katrina, the Housing Crisis of 2008, the emerging Arab Spring, and growing discord in our own country such as Occupy Wall Street, sentiments are changing across the world. As boom times give way to recession, precious metals are rising. Throughout this first decade of the 21st century, circumstances have shifted our thought patterns.   With the “perfect storm” of events, more and more investors are beginning to realize that crisis is upon us. The government, failing to mitigate the problem, and likely making it even worse, forced those of us in traditional investments into the historically safe haven assets of choice – precious metals.

While inflation may play a part in the rise of precious metals, the true driving force is the perception that government is unable to deal with crisis.  As this economic crisis continues to deepen, civil unrest breaks out around the world, citizens are losing faith in their government’s ability to manage crisis, which leads to the prices of precious metals(the last vestige of monetary security) continuing to rise.

For these reasons, buying silver represents an amazing potential for capital gains. With the looming instability of the US dollar, silver also provides an excellent medium to protect against currency debasement (through inflation, hyperinflation, or crisis), while protecting your wealth.

Are you informed and ready to protect your hard-earned assets? If any of this information comes as a surprise to you, I urge you to get yourself educated as soon as possible and determine if an investment in silver is the right option for you.

John Kerry – United States Senator for Massachusetts: Press Room.

Click this link to track the status of this bill as it moves through congress:  http://www.govtrack.us/congress/bill.xpd?bill=s112-1605

A corresponding bill in the House proposes to add, marital status and source of income as well.  It also proposes to add the word “perceived” in front of race throughout the bill.

Click this link to track the status of this bill as it moves through congress:  http://www.govtrack.us/congress/bill.xpd?bill=h112-3030

Let me know your thoughts on these proposals in the comments below.

• In this first scenario, I come into your office and apply for an apartment home. I tender my application but at the same time I ask for a reasonable accommodation. The accommodation that I am requesting is that you make an exception to your resident selection criteria due to my disability. Your criteria clearly states that you don’t except people with a felonious criminal history and I have one. I am a recovering drug addict and have spent time in prison for possession with intent to distribute. I have served my time, and I have been clean and sober for a period of 24 months. I have a good credit history, and I have good landlord references for the previous 24 months. I am willing to provide a letter from my therapist that states that I am successfully enrolled in treatment and I have been clean for 2 years. Would you make an exception to your policy for me based on my request for a reasonable accommodation?
• In this next scenario I come into your office and state that I am disabled due to a problem with alcohol addiction. I have good credit, make adequate income, and have good landlord references. The accommodation that I need from you is that you make an exception to your qualifying criteria because 3 years ago, I encountered a period in my life where I lost my job due to my addiction and destroyed my credit. I filed for bankruptcy and my credit rating is low. I ask that you approve me regardless of my credit history because that was a result of my disability. Would you rent to me?
• The last scenario is I ask you for a reasonable accommodation and allow me to keep a Golden Retriever in my apartment in your “no pets” building. I am a trainer for the local Leader Dog training facility and a key part of my job is to care for and continue to train young animals in my home. This request is not due to my disability but to assist others that have disabilities. I assure you that the dog will be well-behaved, will always be on a leash or harness while in public, and I will always clean up after it. Also, the actual dog that I have will rotate every 6-10 weeks. I indicate to you that I will have to move if you do not allow me to keep the dog. Would you allow me to keep the dog.

So these are the scenarios that I used with my class and got an array of different reactions. I would like to continue the conversation with everyone, so please use the comment fields to give your opinions on these scenarios. Also I would love to hear if anyone has actually encountered any of these things in the real world yet. With over 50% of all fair housing complaints coming from people protected by the class of disability, I think that any conversations that we have will be beneficial to our industry.

For those of you that don’t know me, I will formally introduce myself here in my first blog post. I am a property manager from the core of my being. I started my first property management position as a job while I went to college. I was hired at an apartment community in Troy, Michigan to be a groundskeeper/maintenance technician. The industry quickly sunk claws into the fiber of my being. I quickly promoted in my early career to a building engineer and then crossed over into management. I went on to multiple site management and into vice president roles and ended as a COO and Director of Operations. This journey took about 20 years and afforded me to meet some of the most influential people in my life. About 5 years ago I found myself back in the job market and realized through interviewing that I was not going to make a very good employee. I realized that through my career I had found tremendous success and that from that I had formed some pretty strong opinions about how best to assemble groups of people that could find value in any multifamily asset. I decided it was time to reach out of the comfort of having a consistent paycheck and go into business for myself.

In August of 2006 I started NOI Coach. It was originally chartered to be a consulting and coaching firm that would help owners and asset managers find the maximum return on their investments. I realized that training was one of my key ingredients to finding this success. So I started offering myself to help companies and organizations developing the workflow and the training that would provide the foundation of a high performing organization. I now have trained over 10,000 students and spent the majority of my time educating and writing. I authored my first book, “Hire the Best, Ditch the Rest” in 2010 and am currently finishing my next book, “The Twelve C’s of an Exceptional Leader”.

I don’t know if anyone will be reading this blog, but I think I will find it cathartic to download the random rants and thoughts. Like I said before, I won’t be a daily or even a weekly blogger, but I will be the when the mood strikes blogger. If you ever have a comment or a suggestion, feel free to drop me a line or give me a call to suggest a topic for me to pontificate upon. I look forward (and fear a little) your feedback and commentary on these pages. Till then…….I bid you adieu.

The program that I was teaching is an advanced certification program, and forces the students to look at alternative ways to accomplish the mission of housing our military members that have no dependents. These tend to be the younger sector and lower rank military personnel. I find this class to be very interesting because typically the students are people that have 20 plus years of experience and have an enormous amount of institutional knowledge. But this class forces them to get outside the box that they have been caged in and really ask the question: Can the private sector do this better than us. Being a private sector thinker myself, my gut reaction was: absolutely. But what I have realized over the time that I have been able to spend with this group of people is that we, the private sector, cannot do it better, but we can do it without the severe regulation that the government has placed in their way. The knowledge, the desire, the passion, and the ability to do this is present within the existing GS system. What also is present are shelves upon shelves of rule books, called desk guides, standard operating procedures, and statements of work. This has led to an enormous amount of inefficiency due to bureaucratic nonsense. So it isn’t a matter of doing it better, because with privatization of housing on the family side the government has partnered with some very reputable property management firms and developers, that have been afforded the opportunity to play the same game but with a completely different set of rules.

To use a game analogy, this is like changing the rules of baseball to move the fence in the outfield in by 100 yards. While we are seeing some dramatic stories of success and savings in the defense budget by literally billions of dollars in the military housing privatization initiatives, it forces me to think about what is going on in Washington today where we are again up against a threatened partial shutdown of our government, for the 4th time this year waiting for the 535 crazy congresspeople in Washington DC to stop holding a gun to the head of the american people. If I were a federal employee, I think I would contact an attorney and try to sue the government for the “emotional distress” that these continuing resolutions have brought onto me and my family. I think their could be a legitimate case fought that it would turn into a class action lawsuit that would prevail. All kidding aside, being a taxpayer and seeing the stark differences between the privatized side of housing in the military and the civil servant side of housing in the military, it makes me question, what don’t I see within the rest of the federal agencies(USPS, IRS, HUD, Treasury, Federal Reserve, etc.) I am sure that the trillions of dollars that we are in debt could easily be erased by “good management”. I think that if IBM or Microsoft were this mismanaged the shareholders would revolt and demand
new leadership. It is time as the taxpayers (aka shareholders) of America that we fire the failing management team and the board of directors to make way for people that actually care about the future of our country and the the future of their reelection campaign.

OK stepping off of my soap box now. Thanks for reading this diatribe, I feel much better having gotten that off of my chest. I am less likely to anger the guy next to me now. I promise the next post will be filled with rainbows and unicorns. I am sick of being depressed and angry.

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