Strictly Business feature: Q&A with Chuck Smith of Golden Empire RETC
| Thursday, Nov 05 2009 04:06 PM
Last Updated Thursday, Nov 05 2009 04:15 PM
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Felix Adamo / The Californian Chuck Smith has started a new investment club in Bakersfield.
Chuck Smith has founded a type of club that is new to Bakersfield -- a real estate transaction club that provides food, networking and information to real estate investors and vendors.
We asked him to discuss investment opportunities in a soft economy. His answers have been edited for clarity and length.
Name: Chuck Smith
Age: 61
Occupation: Real estate entrepreneur
Family: Married with one daughter
Question: What's the name of your new club?
Answer: Golden Empire RETC (Real Estate Transaction Club)
Q: How many members do you have?
A: It is somewhere around 80 or so.
Q: When do you meet?
A: It's not a fixed schedule until we're bigger. As we grow, we'll pick a regular time every month. Our next meeting is 6 to 9:30 p.m. Dec. 3 at the Petroleum Club, 5060 California Ave., second floor.
Q: How much does it cost to participate?
A: One meeting is $25 for non-members. Members are $15. Memberships start at $195 a year.
Q: Where can people join or find out more?
A: Call (661) 343-8856 or go to www.geretc.com.
Q: How long have you lived in Bakersfield and why did you move here?
A: I've only been here just over two months. When house prices collapsed, it once again became possible to purchase positive cash-flow property in California. So, my partners and I trimmed back on our investments in other markets to come here. We investigated in a number of southern California areas for jobs, community, vision, housing stock and so on, and found Bakersfield to be the perfect environment.
Q: Why did you want to start a real estate transaction club here?
A: In every area where we invest, we join the local club because this type of club is so beneficial. We looked diligently for an active club we could join here, but there wasn't one so we started one.
Q: What kinds of investment transactions will you be focusing on?
A: We focus on rehabilitating and putting back onto the market the, how shall we say, well worn, used housing stock. For those whose credit was damaged in the housing market collapse, our aim is to try to help them get back in the saddle by having investors buy homes that these folks can lease-option purchase, while improving their credit score. Then there are others who are content to just rent. We accommodate them, also. Last, we have a new home tract we are selling in the southwest, Rancho de Oro.
Q: How many years have you been participating in real estate transaction clubs and what have you learned about investing in that time?
A: Somewhere in the neighborhood of five years. You never stop learning. The rules of the game are always changing. Just two weeks ago, six new bills were passed that affect lending and loan modifications. A new product was released in May where you can buy a home using a reverse mortgage. That's why it's so important to be part of a real estate transaction club, so you can be right on the forefront of what's happening in your market.
Q: What is the advantage to being part of a club, rather than going it alone?
A: The advantages differ depending if you are a vendor of a real estate-related product and/or service or are an active or aspiring investor.
Vendors have a good shot at securing new business from investors. They also get to meet and perhaps collaborate with other vendors to offer investors a more seamless service.
Active investors get to chat with dozens of others investing in the same market. They may form true investment clubs within the structure of our transaction club, whereby six or 10 people may pool their money, form an LLC, or partnerships and collaboratively buy properties, businesses and so on.
For the wanna-be investor, being able to talk with those who are doing it already and to hear from the panel of speakers gives them the confidence to move forward with their first investment.
Our club also has speakers, seminars and workshops covering all aspects of real estate transactions: finding and acquiring a property, getting the offer accepted, closing, rehabbing to sell or lease, and managing tenants, everything.
Q: What's your response to people who say money's too tight right now to invest?
A: Look at it this way: if you want to participate in a golf tournament but know very little about golf, you take some lessons, join a club and get familiar with the game. The same applies to real estate. Don't wait until you have the resources to invest, and then go about getting in the loop, getting educated, etc. Be prepared ahead of time so you'll be ready when you find the right deal. And if you do some networking, you'll find that deal a lot faster because people will bring them to you.
Q: In many fields of investing, large sums are needed to get started. Is that the case with real estate?
A: You'd be surprised how many ways there are to invest in your first property without having any capital at all! For example, there are 'hard money lenders' who will fund deals strictly on the merit of the deal itself. So, you may find a property that the lender feels is undervalued, and obtain enough financing to cover the purchase, closing costs, and perhaps even a bit to go toward rehab.
Or, strike a deal with someone who has the money, but not the time. You pitch in your sweat equity to find the deal, secure it, get it rehabbed, sell/lease/rent it, and split the proceeds.
Maybe you have a nice boat you no longer need, or have a small farm you inherited. Work out a trade. There are many, many ways to make it work. We help you think outside the box to find the means to do what you want to do.
Q: Major stock indexes took a hit last week after a reported drop in consumer spending fanned worries that the economic recovery won't be sustainable. What's your take on the outlook for next year?
A: Real estate is a local market. While one part of a city may be in decline, another part may be roaring to new heights. While one state plummets, another may be skyrocketing. And just like in any market, there are winners and losers. I'm sure you know the stories of those who have made fortunes when it looked like the end of the world was neigh.
We're bullish on this market, and are not alone in feeling this way.
Q: Is real estate a safe investment in Bakersfield, in light of the fact that more than half of local mortgages are upside down?
A: Bakersfield is THE place to be for real estate investing for the next five years or better. According to data recently released by CB Richard Ellis, Bakersfield is slated to recover first in the state as far as getting back to a normal employment levels. Secondly, smartzip.com, a new independent company using extensive comparative data on every one of the 15 million homes in California, found that Bakersfield ranks first in positive cash flow real estate and rated Bakersfield first in equity gain in the state.
If you speculate on real estate, you may be setting yourself up for a huge fall. However, if you invest wisely and make informed, realistic decisions, you should do very well in this market.
