The Greatest Real Estate Advantage

Ignoring the fact that stocks, bonds, mutual funds, and other investments are either over-valued or providing negative real returns, real estate has almost always been the best use of capital specifically because of your ability to leverage your investment.

If used properly, leverage will significantly enhance your return on investment. This is easy to do if you invest in income-producing real estate but much more difficult, if not impossible, if you’re investing in stocks or mutual funds.

In our industry we often refer to it as “other people’s money” or “OPM”.

Let’s say you have $100,000 to invest. If you invest it in stocks, bonds, or mutual funds, you can only buy a $100,000 stake as a shareholder. However, if you invest that same amount in rental property – a quality single-family rental, duplex, or in some areas even a four-plex – you can leverage that same $100,000 into a much higher valued asset.

For example, you can purchase $400,000 worth of income-producing rental properties, use only $100,000 of your own money and the bank or lender will lend you the other $300,000 at a fixed interest rate amortized over 25 or 30 years. You now have positive leverage when the interest rate on your mortgage is lower than the overall return on the property. Compare this to investments in the stock market. It doesn’t even compare!

Let me give you an example. When you have $400,000 of rental property generating a net cash flow of $34,400 each year without any debt financing, that’s an 8 percent cash-on-cash return on your investment ($34,400 / $400,000 = .086 or 8.6 percent).

Now say you invest your $100,000 and borrow $300,000 at 5.0 percent interest, amortized over 30 years. The monthly mortgage payment is $1,610.46 per month or $19,325.52 per year, the net cash flow of $34,400 gives you $15,074.48 in net cash flow. That increases your return from 8.6 percent to 15.1 percent ($15,074.48 / $100,000 = .1507 or 15.1 percent).

By using leverage your annual cash-on-cash return increases by over 75 percent (15.1 – 8.6 = 6.5 / 8.6 = .7558 or 75.5 percent). Isn’t that amazing? That’s the magic of leverage!

Today banks and private lenders (via their self-directed IRAs or just private money) consider real estate a relatively safe option. In fact, compared to the stock & bond market real estate is not only safer but actually more profitable.

If your retirement account (IRA, 401k, etc) is not self-directed then you’re missing out on some great opportunities. Look into it, or contact our office to find out more.

There are, however, a few things to keep in mind as you use leverage to invest.

We just came through an era when investors got “OPM happy” and overdosed on cheap leverage for all the wrong reasons. Make sure your properties cash-flow and budget in possible vacancies.

Choose a high quality property in a good neighborhood. If you were investing with cash-only you could choose a more risky “up and coming” kind of property. But if you are using leverage choose an area where, even if rental demand declines, you could sell the property easily. Remember that rental property isn’t as liquid as stocks, bonds or mutual funds. A high quality property makes it easier if an emergency strikes and you are forced to sell.

My most valuable advice is be prepared for the business of owning rentals and keep in mind that it is most certainly a business. Get serious about your education and dedication to the business or hire a good property manager. Finding a good property manager or firm can be the most difficult part of investing.

Finally keep in mind that any investment that produces any reasonable return involves some risk. I believe that real estate isn’t nearly as risky as the current stock and bond markets (negative real rates of return anyone?) but there is always some uncertainty. Be honest with yourself to make wise choices.

Although I am not a financial advisor and cannot give any kind of financial advice, I will tell you that I have moved nearly all of my investments into real estate of some kind.

If the real estate holdings themselves are not your cup of tea you may want to consider being a private lender yourself. Experts will tell you that a balanced portfolio is best. I believe that adding real estate, in some form, to whatever investments you prefer will bring you far greater returns than stocks, bonds, and mutual funds alone could bring. I speak from experience when I say that using a little leverage for income-producing rental real estate can build wealth much faster than other traditional options.

Just remember, it’s “the magic of leverage.”

UX designer tips for designing an awesome landing page

Gone are the days of static websites and even the rest like the carousels, and the ones with hamburger menus. Though, all these seemed to impress and weave magic in the minds of people in the early days of web or maybe until a decade or so back, it was not until recently that people actually started realizing and differentiating between things that they need and need not.

Landing pages are the soul of any website design. Poorly designed landing pages are equal to grossing zero business. So, when you land up yourself on a landing page through an impressive ad, just to find yourself in an annoying place, how would you react? To be honest, you would never return. You would leave the page as soon as you can and then, find business elsewhere.

Are there any parameters on which you can align your landing page? Of course, there are:

It should be in synch with the ad that directs to the landing page.
Provide the promises you made. (Since, this is the reason why they are here. Why annoy them?)
Let it be impressive.

What happens when you don’t provide what you promise?

  • People lose interest in you. They vow to never return.
  • Increased bounce rates, which will spoil your reputation in Google’s eyes.
  • Reduced sales, which will lead to loss in sales.
  • Negative opinions start spreading like wildfire ruining your reputation amongst all the audience.
    How could you solve this? Remember, when Math taught us all problems come with a solution, so does your landing page.

An appealing user experience with an excellent platform to directing your users to fulfilling their user goals is the door to conversion that starts at your landing page.

Why should you care about user experience?

Weird question! You are doing business for your people, so if you do not provide them with a great user experience, how do you expect them to convert them into sales.

So, designing must be always intended and aimed at your people.

As a designer, everything starts at you and ends at you. It’s in your hands to take your people to the product. And, the experience that you provide them with while on their journey is something that matters. Their level of comfort, the interaction level, the ease of communication, problem solving efficiency and above all whether the product satisfies their needs, marks your success.

And, the exciting part is that all this has happen within a short span of time of just 50 milliseconds that you have. This is where you can utilize your skills and talent and design a great landing page that people can relate to.

What kind of a landing page are your people expecting? No one knows exactly, but in a generic sense you could incorporate some of the above listed items to design an interesting landing page:

  • Leads capture form that is clean, clear, and precise, and above all is secure.
  • Eliminate distraction (e.g., navigation elements, etc.)
  • Include enticing offers and compelling promises that actually are true.(A CTA that would not fail their hopes.)
  • Finally, timely response and completion of tasks without no time or effort wasted on waiting.

The Past and Present of Machine Learning in Gaming

Machine learning represents a crucial area of artificial intelligence (AI). Over time, machine learning can teach a piece of software how to behave when it encounters certain types of environments or problems. While some scientists use machine learning to advance the future of AI, others have focused on exploring how machine learning can function within artificial worlds. In other words, these scientists introduce machine learning to video games to see if the AI can learn how to play.

Early Attempts at Machine Learning in Gaming
Computer scientists have been testing the abilities of machine learning in video games for over 60 years. In 1949, Claude Shannon published a research paper titled “Programming a Computer for Playing Chess.” Shannon’s paper estimated that chess has more than 10^120 possible positions. Even today’s supercomputers would find it impossible to solve chess problems with brute force instead of playing against their opponents.

By 1997, IBM had developed a computer called Deep Blue that managed to defeat world chess champion Garry Kasparov in a six-game match. This was the first time that AI had beaten a human in chess.

It took IBM several years to teach Deep Blue how to play chess well enough to compete against a master. Early versions of the AI couldn’t even beat basic chess-playing software run on a personal computer. Over time, though, Deep Blue learned how to use the rules of chess to its advantage. Like a human player, it discovered that it could predict and respond to its opponent’s moves. It may make some people uncomfortable to think about Deep Blue in this way, but the computer was thinking about how to beat its opponent. It wasn’t just following rules.

More recently, AI researchers introduced machine learning to “Super Smash Bros.,” a hand-to-hand fighting game that features some of Nintendo’s most popular characters. The researchers introduced four rules about the game’s goals, strategies, tactics, and chains of button presses to see how the AI would perform.

The AI excelled at beating opponents in “Super Smash Bros.” Even the world’s best players faced great difficulty competing against the AI. In fact, the AI performed so well that few human players managed to hit its game character once. (Readers can see videos of this at GitHub.)

Adding Evolutionary Genetics to AI

In 2015, Seth Bling revealed that he had created an AI called MarI/O that learned to beat a level of “Super Mario World” in just 34 tries. Bling gave the AI neural networks and algorithms so it could decide which attempts gave it the information it needed to move forward in the game. Other than that, Bling gave it nothing. MarI/O didn’t even know to press left to move left. It had to discover that on its own.

Bling’s project was revolutionary because it used aspects of evolutionary genetics. Bling wanted to see how the AI’s approach to playing would evolve. He found the “species” that worked best would dominate the AI’s progress. Eventually, the AI had taught itself everything that it needed to complete a level successfully.

Introducing AI to Games of Imperfect Information

Chess and “Super Smash Bros.” are considered games of perfect information because both players have full access to the rules and the board. Other than an opponent making a particularly inventive move, no one encounters surprises in chess. Other games of perfect information include backgammon, checkers, tic-tac-toe and Go.

Games of imperfect information operate in a more realistic way that can represent how the real world functions, or at least how the rules of a fictional world function. With games of imperfect information, players have to make quick decisions. Players also only have access to certain aspects of the game. For instance, Player A may not have the ability to see Player B’s board. This creates more uncertainty for machine learning to handle.

Current thinking suggests that exposing machine learning to games of imperfect information could lead to significant improvements in technologies like autonomous cars. Operating a car safely requires an understanding of real-world physics as well as an ability to respond to unexpected events.

Somewhat surprisingly, “Minecraft” may offer one of the best environments for AI to learn in. The “Minecraft” universe follows specific rules that are very similar to those created by Earth’s physics. Within the game, though, AI can make mistake after mistake without harming anything. If it made those same mistakes while driving a car, companies would end up spending a lot of cash on replacement cars and driving courses.

Machine learning has already shown humans how impressive artificial intelligence can become when given enough time to train itself. In the near future, researchers may use video games to teach AI how to perform all manner of tasks and recognize objects that exist in the world.

No one should expect AI to find the same solutions that humans developed, though. AI and humans do not experience environments in the same ways. This reality could cause problems for researchers who want to make AI a part of the real world.