Failure is not an option!

I watched an awesome movie with my daughters last night. Apollo 13. This movie epitomizes the American belief that anything is possible. Three men 205,000 miles from earth in a spaceship made from aluminum foil. Limited electricity, no heat, almost no oxygen but shear will power and American ingenuity brought those American Astronauts back to earth safely.

Failure is not an option!

A small electrical failure stranded the ship but the country and NASA never gave up on them. Teamwork and determination brought them back to earth.

Does any of this sound familiar in these times. In the past 10 years very smart bankers (they call them Quants because they studied quantum physics in college, not banking) created vehicles that propelled our economy into the future. These vehicles made profits that were unheard of in the past and with these finance vehicles home owners were created, businesses were financed, power plants built, etc, etc. After a while it was every one's strong belief that this economy would stay strong forever. Apollo 13's original mission of landing on the moon wasn't even scheduled to be covered on TV. The belief was that this mission was just routine, in 1970 we started believing that space travel really wasn't rocket science.

One small electrical failure on Apollo 13 set off a chain reaction that would be fatal. Sounds like to today's string of failures, Bear Sterns, Lehman Brothers, AIG. All the worst case scenarios that no one ever planned for. Even the really smart quants.

Amazingly once the Apollo 13 failure became public the media coverage was enormous. Nothing else was on the TV or papers. Sounds familiar today with the economy. Can't go anywhere without hearing a story of economic failure. Even an article pointing to good signs in the economy is punctuated by a comment that it won't last or that its an anomaly. During the Apollo 13 mission, the media always reported how bad the odds where against the returning astronauts.
In the end, as you all know, the astronauts of Apollo 13 made it home safely. It was risk taking, ingenuity, teamwork, out side the box thinking and the belief that failure is not an Option, that eventually brought them down safely.

Once that thinking takes effect in the US on this economic crisis, sounder minds will prevail and we will be back on the track to a stabilized economy. I am not saying the economy will be as hot as it was but it will be stable.

My daughters watched the movie with me and Bryna(6) said after wards, that the lesson she learned is that anything is possible with teamwork.

Let's hope that politicians, bankers, CEOs, and consumers can all find it in themselves to work together to bring the US (now the world) out of this economic free fall.

Make it happen
Nick

The Power of Positive Thinking

Its not in the newspapers, in the streets of New York, or even on main street America. Optimism is by far, going to be the biggest driver of the economy out of recession/depression territory. Until banks, investors, business owners, and consumers are optimistic about their financial outlook the economy will only get worse.

Unfortunately, it doesn't seem that Obama has the ability to make everyone optimistic, and rightly so. He can not do it alone, we have to be ready to jump in and do our part. We are at a period in the US where consumers and businesses need to reposition themselves into better spending patterns. In some households that means no more BMWs or multiple vacations a year, in others it may mean no home ownership. These are realignments that need to be done because our previous levels of spending were unsustainable.

How do we become more optimistic? Well its pretty easy, start thinking about the present and not the past. About the current opportunities not the past failure, about the good news not the negative media spin.

Everyday, very positive and amazing things happen in peoples lives. However, lately, we tend to be focused on the 10 negative stories on the evening news. To become more optimistic, stop watching the news. Quickly skim the morning news and only read the positive articles or find some good positive articles on the Internet (check out www.happynews.com). Find an article you like and send it to everyone you know( include your residents).
Ask them to send you any positive articles they find in the news. Before you know it you will be inundated by positive news and energy.

With this new found positive energy, keep spreading it to your residents, employees, vendors, sellers, whoever you deal with.
Remember, in today's environment, you made be giving them the only positive news they received all day. Positive energy shared with others, comes back to you and the company in kind.

"I am not saying that the world economic crisis is going to be solved by smiles and positive articles, but I do believe positive attitudes will help start propelling our country back into the economic powerhouse we are accustomed to.

Let's go out and make people happy.
Thanks.
Nick

The Way I See It

While it seems that the news gets worse and worse every day, stocks down, real estate values down and going further, corporate bonds priced at all time lows, unemployment at historical highs. Its bad, BUT if you look back through history, all the greatest companies have had their breakthroughs in bad economic times.

The way I see it. How could we ever make any money in an economy where we were buying buildings at prices that yielded returns lower than our cost of debt. That means we need to pay to own the building. But its even worse because the debt was at all time lows so interest rates had no place to go but up. Our residents were moving out to buy houses with $250,000 mortgages that were easier to obtain approval for than our credit apps for $700/mo apartments.

Lucky for us that's all changed. Apartment buildings are now priced for profitability. We can now buy buildings that cash flow and depending on when the economy kicks back in, we may even see some appreciation. BUT, it gets even better. Residents can no longer buy $250,000 homes (or even the same house for $150,000) and get 100% loans so they are staying with us longer and longer. Additionally, many sellers bought long term assets (apartment buildings) with short term money (3 year) so now they need to pay back lenders and can't. So what should be priced at $10 Million has to be sold for $8 M. There is some amazing opportunities to be had in these times.

From an operational standpoint the opportunities to work with vendors and suppliers are huge. I have personally witnessed firms offering 30-50% discounts to keep our business. On top of that our new lean management structure has significantly reduced our operating costs.

So the way I see it is this recession is not only forcing us to be a better more profitable company, but also creating buying opportunities that will lay the foundation of our growth into 2010 and beyond.

Let's make it happen.
Nick

What I Learned On The Ski Slopes This Weekend

I spent the weekend skiing in Park City, Utah and met up with a few professional business strategists that made some interesting points to me.

I will try to brief you below:

1. Overreaching is the biggest cause of corporate failure. Do what you know.

2. No one gets better without getting worse. Examples - The US Army drives recruits in basic training to the point where they are bound to fail. The training breaks recruits down so they can move up. You can't get better until you see yourself fail.

3. Get the people right, not the right people. This is the case I witnessed first hand last year when I spent time on the USS Truman, Naval Aircraft Carrier. This is the largest ship in the US military and it was run by 3,800 enlisted men (average age 19) and 200 officers. The Navy doesn't have the ability attract only the best and the brightest, so they focus on changing recruits into the right people for the job.

4. Absorb Anxiety - Saving Private Ryan is the best example of how the military handles this. Gripes should always go up the chain of command never down. A manager always should be optimistic yet realistic with his/her direct reports.

5. Convert anxiety to opportunity. Its a manager's job to help his/her reports convert their fears into opportunities for success. Examples - during the Olympics when a gymnast is doing a tough move, her coach will get close to provide a safety net if she falls. This eliminates the fear so she can focus only on success.

6. Stress is a major factor in loss of productivity. MRI brain studies show that the same brain patterns for pain are present in the brain when someone fears imminent pain. When people are subject to pain, they react with tunnel vision and are not focused on the big picture. Again, its a managers job to eliminate the fears so people can be more productive. Its a direct report's job to bring the problems and concerns up to your supervisor, so s/he knows of the issue at hand. Fear is something not always apparent in people.

7. A leader must see things as they are, but not take his eye off the goal or big picture.

8. Hold hands in traffic. - Teams need to work together, not against one another, during difficult times. In the military one of the biggest problems during a firefight is not being shot by the enemy, its being shot by your own. In times of chaos - like these economic times- we need to hold hands and communicate with each other, if we are going to make it out alive.

Please think about how you can take the above and work them into your daily lives
If anyone has any questions on these items please contact me directly.

Thanks for Making it Happen.
Nick

Signature Economic Stimulus Plan

Signature Economic Stimulus Plan. Bad News, Good News

The economy is bad and getting worse. There doesn't seem to be any immediate end to this one. That's the bad news. The good news is that our apartments are the perfect solution to the current economic problems.

People overspent through this decade and now its payback time. Living in a Signature Community offers an affordable value alternative that will keep many families from going broke. And if they do it right they can take advantage of our jump start home ownership program and make life even more rewarding in the future.

Someone making less than $50,000 cannot afford to live in a $250,000 home, period! Even with the best of interest rates with real estate taxes and all other expenses, that home is costing them over $1500 month. A comparable apartment in a Signature Community is $1000. That's a $6000/ year savings (more than 10% of household income) and more than 10 times what the average household was saving the first part of this century.

It is our job to make residents at Signature Community feel at home and understand that the best thing they could do for themselves and the US economy is to start saving. Instead of accepting President Obama's proposal to reduce their mortgage payments people should be moving out and moving into a Signature Community signing a long term lease and start rebuilding a sustainable life. The Obama proposal is only going to let them be cash poor for the next decade. Whereas the Signature Stimulus program will put them on the road to savings almost immediately and long term will allow them to buy a home in the future.

It is our job as one of the leading providers of rental homes in the country to educate consumers so they start making the right decisions and start thinking about the future of themselves and the US.

Interestingly, we are also doing this with sellers of apartment buildings all over the country. Many, many sellers bought in to the market over their heads and now they need the same assistance that our residents need. Everyday our acquisitions group is working with a seller who needs to renegotiate his mortgage with his/her lender so that he can sell and move on with his life. We have sellers that have been paying hundreds of thousands of dollars a year to own a building that is worth less than its mortgage. Sound familiar?

The next 18 months are going to be revolutionary in the Real Estate market. Millions of homes need to re positioned by the banks/owners and the same goes with thousands of apartment buildings throughout the US. Signature Community could be instrumental in the process of revitalizing the US economy. I don't agree with President Obama on the solution, my idea is that the federal government shouldn't subsidize property owners who can barely afford their payments. Government should act a safety net not a crutch. If you give people a crutch, they will be in over their heads for a long time, if you provide a safety net, they will have an opportunity to bounce back up. We are providing safety nets.

Let's go out there and save the economy.
Nick