4 Straightforward Steps to Success By: Jim Rohn

Success is nothing more than a few simple disciplines practiced every day. Success is neither magical nor mysterious. Success is the natural consequence of consistently applying basic fundamentals.


I’ve said it before, that success is the study of the obvious—but sometimes we need someone to remind us and show us the simplest way to get there.

Here are four simple steps to find your way to more success than you could ever imagine:


  1. Collect good ideas.

My mentor taught me to keep a journal when I was 25 years old. It’s the best collecting place for all of the ideas and information that comes your way. And that inspiration will be passed on to my children and my grandchildren.

If you hear a good health idea, capture it, write it down. Then on a cold wintry evening or a balmy summer night, go back through your journal. Dive back into the ideas that changed your life, the ideas that saved your marriage, the ideas that bailed you out of hard times, the ideas that helped you become successful. That’s valuable, going back over the pages of ideas you gathered over the years, reminiscing, reminding yourself. So be a collector of good ideas, of experiences, for your business, for your relationships, for your future.

It is challenging to be a student of your own life, your own future, your own destiny. Don’t trust your memory. When you listen to something valuable, write it down. When you come across something important, write it down. Take the time to keep notes and to keep a journal.


  1. Have good plans.

Building a life, building anything, is like building a house; you need to have a plan. What if you just started laying bricks and somebody asks, “What are you building?” You put down the brick you’re holding and say, “I have no idea.”

So, here’s the question: When should you start building the house? Answer: As soon as you have it finished. It’s simple time management.

Don’t start the day until it is pretty well finished—at least the outline of it. Leave some room to improvise, leave some room for extra strategies, but finish it before you start it. Don’t start the week until you have it finished. Lay it out, structure it, put it to work. The same goes for the month ahead—don’t start it until you have a plan in place.

And, the big one, don’t start the year until it is finished on paper. It’s not a bad idea, toward the end of the year, to sit down with your family for the personal plans, to sit down in your business for the professional plans, to sit down with your financial advisor to map out money plans. Plan out your calendar, your game plan, for all of life’s moving parts.

The reason why most people face the future with apprehension instead of anticipation is because they don’t have it well designed.


  1. Give yourself time.

It takes time to build a career. It takes time to make changes. It takes time to learn, grow, change, develop and produce. It takes time to refine philosophy and activity. So give yourself time to learn, time to start some momentum, time to finally achieve.

I remember when Mama was teaching me a little bit about the piano. “Here is the left hand scale,” she said. I got that; it was easy. “Here is the right hand scale.” I got that, too. Then she said, “Now we are going to play both hands at the same time.” “Well, how can you do that?” I asked. Because one at a time was easy… but two the same time? But I got to where I could play the scales with both hands. “Now we are going to read the music and play with both hands,” she said. You can’t do all that, I thought. But you know, sure enough I looked at the music, looked at each hand, a little confused at first, but finally I grasped it. Then I remember the day when Mama said, “Now we are going to watch the audience, read the music and play with both hands. Now that is going too far! I thought. How could one person possibly do all that? By giving myself time to master one skill before we went to the next, I got to where I could watch the audience, read the music and play with both hands.

Life is not just the passing of time. Life is the collection of experiences and their intensity.


  1. Change yourself.

Learn to solve problems—business problems, family problems, financial problems, emotional problems. The best way to treat a challenge? As an opportunity to grow. Change if you have to, modify if you must, discard an old philosophy that wasn’t working well for a new one. The best phrase my mentor ever gave me: “Mr. Rohn, if you will change, everything will change for you.” I took that to heart, and sure enough, the more I improved, the more everything improved for me.

You cannot change your destination overnight, but you can change your direction overnight.


Affordability Dips Year-Over-Year

Housing affordability saw steep declines across the nation over the past year, with real house prices jumping 8.2 percent since January 2016, according to the Real House Price Index released by First American Financial Corporation on Monday.


According to Mark Fleming, Chief Economist at First American, though housing prices decreased slightly from December 2016 to January 2017—0.1 percent—over the year, they’ve significantly increased, lowering buying consumer buying power and affordability. “Real purchasing-power adjusted house prices declined 0.1 percent in January, as mortgage rates did not meaningfully change and income growth continued,” Fleming said. “Despite the monthly increase in affordability and continued strong wage growth, homes are less affordable across the country compared to a year ago.” Total consumer house-buying power dropped 2.3 percent year-over-year, while real house prices fell to 33.3 percent below their housing-boom peak from July 2006. Unadjusted, house prices rose by 5.7 percent over the year.


According to Fleming, “on a year-over-year basis, real house prices increase in all the metropolitan areas tracked by First American.” Jacksonville, Florida, in particular saw a serious decrease in affordability, with a dip of 19.3 percent over the year. Other metro areas to see large increases in real home prices were Charlotte, North Carolina (14 percent); Milwaukee (14 percent); Denver (12.6 percent); and Tampa (12.4 percent). The cities with the smallest increases were Baltimore; Virginia Beach, Virginia; San Francisco; and Hartford Connecticut.


On a state level, the biggest annual jumps were seen in New York, which saw a 13.4 percent increase in real home prices, Colorado (13.2 percent), Vermont (12.7 percent), Illinois (11.8 percent), and Maine (11.6 percent). The only two states to see a year-over-year decline were Mississippi and Connecticut. “Almost half of the markets we track saw double-digit affordability declines in January, compared with a year ago. The low inventory of homes for sale across much of the country is creating increased competition and setting the stage for a very robust sellers’ market this spring,” Fleming said. “While affordability is lower compared to a year ago, the level of affordability in most markets is still high by historical standards, which is why demand is expected to remain strong this spring.”


Tougher Times ahead – for Apartment Development?

According to multifamily experts speaking at the IPA Multifamily Forum Chicago, it’s currently difficult to get new developments off the ground. It’s harder now to get a successful multifamily development out of the ground, but not so tough that the most experienced players are coming up short.


Land costs are up somewhat, and construction costs are as well, though not enough to keep strong deals from going forward. Thus experience matters very much in the current market. Projects that aren’t going well often have unanticipated problems that more experienced developers could have anticipated, such as issues with the city or unions or the neighbors. Experience also matters more now because relationships are huge in lending, in both directions. Lenders are more cautious on multifamily deals, but borrowers and lenders who have strong relationships are able to work together to get deals done, the panelists explained.


As for equity partners, they still want what they’ve always wanted: strong returns. The speakers said they’re seeing a lot more equity investors now, including local family offices, who perceive that the equities markets are overheated, and who are therefore looking for a safer place to put their money. Real estate is a natural alternative. So there’s plenty of equity out there for stabilize properties, but again, experience matters. Developers with a strong track record are naturally going to have the advantage as much on the equity side of funding as the debt site.


The speakers also discussed rentals vs. condos, and how the trend of condo de-conversion to apartments has been strong in recent years, but which is slowing down now. One reason is the influx of new rental properties, which have the edge in attracting residents, even against rentals that feature condo finishes. That’s because condo finishes aren’t so different now than high-end rentals.


The conversion of apartments to condos—so popular even for smaller properties in the ’90s and ’00s—is even less likely in the current climate, because the gap in size and finishes and amenities is so wide, that it would be expensive to do. On the other hand, if the economics make sense, developers will do it. If a gut rehab apartment-to-condo deal is worth it, the conversion will be done.


Hoteliers Squeeze Expenses, Eke Out Profit

Over the next few years, says R. Mark Woodworth of CBRE Hotels, “Owners and operators should spend just as much time thinking about expenses as they do RevPAR.” Although modest, hoteliers’ 2016 profit growth was “a commendable accomplishment given the upward pressures on labor and distribution costs,” says Woodworth.


In an era of slowing revenue growth, US hoteliers managed to eke out another year of profit increases by wringing expenses out of their operations. It’s an approach that R. Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research, advises operators to continue in the near term.


CBRE Research is projecting yearly RevPAR growth ranging from 1.7% to 3.0% between now and 2021. Against this backdrop, Owners and operators should spend just as much time thinking about expenses as they do RevPAR over the next few years. Effectively managing those two metrics will dictate the profitability of their operations. Ultimately, it is bottom-line profits that influence values, stimulate transaction activity, pay the debt and provide returns for owners and investors.


A newly issued Hotel Industry report, based on a survey of operating statements from thousands of domestic hotels, finds that total operating revenue rose just 2.4% last year, driven by a 0.2% increase in occupancy and a 2.5% rise in average daily rate. Yet operators managed to achieve a 3.7% increase in gross operating profits by holding expense increases to an average of 1.6%. The competitive market conditions faced by US hotels in 2016 have been well documented, with the results having provided an understanding of the impact that the modest revenue gains had on the bottom line.


It’s clear, that US hotel operators perceived the threat of stagnant or declining occupancy and slow ADR growth and reacted by controlling expenses. The 3.7% increase in profits is the lowest have observed since the Great Recession, but was a commendable accomplishment given the upward pressures on labor and distribution costs.


Hoteliers kept cost increases to a minimum, by controlling variable expenses and cutting costs that tend to be more fixed. Given that the typical hotel in the sample experienced an increase in occupancy, it bears mentioning that operated departmental expenses—which are more variable—grew by just 1.7% during the past year.


Undistributed expenses increased by just 1.3%. Hourly compensation for hospitality industry employees increased by more than 4.0%, making it somewhat surprising that total labor costs grew by just 2.8 percent for the year implies that managers controlled staffing levels and/or increased productivity. In spite of the noble efforts, for a second year in a row, it was the salary and wages component of labor costs that drove the increase in total labor costs, not employee benefits.


Labor costs account for about half of a hotel’s operating expenses. Hotel operators benefited from low inflation, as well as a reduction in the costs for items such as food and utilities, however, as revenues continue to rise, so do the costs for related expenses like credit card commissions, management and franchise fees.


The one expense line item that stood apart from the crowd was the 6.8% increase in commission payments made to travel agents, OTAs and other intermediaries, he adds.

Amazon’s Online Gain comes With a Lot of Pain in Brick and Mortar Retail

Is 2017 the year of the great retail apocalypse?  Reading the headlines, it would seem so.
There’s truth to it in the data. So far, there have been nine major retail bankruptcies in 2017—as many as all of 2016. Retailers are closing stores faster than ever, even faster than the 2008 meltdown, on pace for roughly 8,640 store closings this year according to some projections. The 1,200 malls still operating in the U.S. are coming under extreme pressure, and analysts are predicting between 300-400 will close in the next decade.
J.C. Penney, RadioShack, Gamestop, Macy’s, Sears, the Limited and American Apparel have all announced closing 100+ stores. Sports Authority and hhgreg liquidated. Payless, Gordman’s and Rue21 filed for bankruptcy. Recently Bebe announced it was closing all of its 175 stores and several apparel companies’ stocks hit new multi-year lows, including hot brands like Lululemon and Urban Outfitters. Ralph Lauren announced he is closing his flagship Polo store on Fifth Avenue—joining a growing list of brands abandoning the iconic retail Mecca.
What explains this carnage? Is the consumer dead? Is this a temporary cyclical retail recession? No. Retail sales are hitting new all-time highs. Each of the last five holiday shopping seasons were door busters. Consumer confidence is high, gas prices are low, unemployment is under 5% and unemployment claims hover at 50-year lows. Even wages have started rising meaningfully—now even for middle-and lower-income Americans. And, in spite of the retail apocalypse, some mall owners with class A properties are actually having no trouble raising rents.

The Formula for Success (and Failure) By: Jim Rohn

Failure is not a single, cataclysmic event. We do not fail overnight. Failure is the inevitable result of an accumulation of poor thinking and poor choices. To put it more simply, failure is nothing more than a few errors in judgment repeated every day. Now why would someone make an error in judgment and then be so foolish as to repeat it every day? The answer is because he or she does not think that it matters.


On their own, our daily acts do not seem that important. A minor oversight, a poor decision, or a wasted hour generally doesn’t result in an instant and measurable impact. More often than not, we escape from any immediate consequences of our deeds.


If we have not bothered to read a single book in the past 90 days, this lack of discipline does not seem to have any immediate impact on our lives. And since nothing drastic happened to us after the first ninety days, we repeat this error in judgment for another ninety days, and on and on it goes. Why? Because it doesn’t seem to matter. And herein lies the great danger. Far worse than not reading the books is not even realizing that it matters!


The price must be paid for our poor choices—choices that didn’t seem to matter.


Those who eat too many of the wrong foods are contributing to a future health problem, but the joy of the moment overshadows the consequence of the future. It does not seem to matter. Those who smoke too much or drink too much go on making these poor choices year after year after year… because it doesn’t seem to matter. But the pain and regret of these errors in judgment have only been delayed for a future time. Consequences are seldom instant; instead, they accumulate until the inevitable day of reckoning finally arrives and the price must be paid for our poor choices—choices that didn’t seem to matter.

The Formula for Failure


Failure’s most dangerous attribute is its subtlety. In the short term those little errors don’t seem to make any difference. We do not seem to be failing. In fact, sometimes these accumulated errors in judgment occur throughout a period of great joy and prosperity in our lives. Since nothing terrible happens to us, since there are no instant consequences to capture our attention, we simply drift from one day to the next, repeating the errors, thinking the wrong thoughts, listening to the wrong voices and making the wrong choices. The sky did not fall in on us yesterday; therefore the act was probably harmless. Since it seemed to have no measurable consequence, it is probably safe to repeat.

But we must become better educated than that!


If at the end of the day when we made our first error in judgment the sky had fallen in on us, we undoubtedly would have taken immediate steps to ensure that the act would never be repeated again. Like the child who places his hand on a hot burner despite his parents’ warnings, we would have had an instantaneous experience accompanying our error in judgment.


Unfortunately, failure does not shout out its warnings as our parents once did. This is why it is imperative to refine our philosophy in order to be able to make better choices. With a powerful, personal philosophy guiding our every step, we become more aware of our errors in judgment and more aware that each error really does matter. Now here is the great news. Just like the formula for failure, the formula for success is easy to follow: It’s a few simple disciplines practiced every day.


Now here is an interesting question worth pondering: How can we change the errors in the formula for failure into the disciplines required in the formula for success? The answer is by making the future an important part of our current philosophy.


If this is true, why don’t more people take time to ponder the future?


Both success and failure involve future consequences, namely the inevitable rewards or unavoidable regrets resulting from past activities. If this is true, why don’t more people take time to ponder the future? The answer is simple: They are so caught up in the current moment that it doesn’t seem to matter. The problems and the rewards of today are so absorbing to some human beings that they never pause long enough to think about tomorrow.


But what if we did develop a new discipline to take just a few minutes every day to look a little further down the road? We would then be able to foresee the impending consequences of our current conduct. Armed with that valuable information, we would be able to take the necessary action to change our errors into new success-oriented disciplines. In other words, by disciplining ourselves to see the future in advance, we would be able to change our thinking, amend our errors and develop new habits to replace the old.


One of the exciting things about the formula for success—a few simple disciplines practiced every day—is that the results are almost immediate. As we voluntarily change daily errors into daily disciplines, we experience positive results in a very short period of time. When we change our diet, our health improves noticeably in just a few weeks. When we start exercising, we feel a new vitality almost immediately. When we begin reading, we experience a growing awareness and a new level of self-confidence. Whatever new discipline we begin to practice daily will produce exciting results that will drive us to become even better at developing new disciplines.


The real magic of new disciplines is that they will cause us to amend our thinking. If we were to start today to read the books, keep a journal, attend the classes, listen more and observe more, then today would be the first day of a new life leading to a better future. If we were to start today to try harder, and in every way make a conscious and consistent effort to change subtle and deadly errors into constructive and rewarding disciplines, we would never again settle for a life of existence—not once we have tasted the fruits of a life of substance!

Fannie, Freddie Transfer $18B in Risk

Fannie Mae and Freddie Mac transferred $18 billion in credit risk on $548 billion mortgages through capital markets, insurance, and pilot credit risk transfer transactions over the course of 2016, according to the Federal Housing Finance Agency’s Credit Risk Transfer Progress Report released Monday. Of the total amount transferred, 72 percent was through debt issuances, 25 percent was through transactions with insurers and reinsurers, and the remaining was through front-end transactions. This includes lender-collateralized recourse transactions and front-end pilots with mortgage insurer affiliates.


Both GSEs transferred significantly more than in previous years. In 2015, Fannie Mae transferred $239.1 billion in credit risk, compared to 2016’s $332.9 billion. Fannie Mae also transferred nearly a billion more through credit insurance and reinsurance programs than in the year prior. In total, Freddie Mac transferred $181.3 billion in 2015 and $215 billion in 2016.


Last year marked the first time either GSE issues credit risk transfer transactions on loans with 15-year terms. Though Freddie Mac was the only agency to sell a portion of the first dollar of expected credit losses in 2015, both GSEs utilized these types of transactions in 2016. According to the FHFA, “The Enterprises continue to explore additional credit risk transfer structures that reduce risk to the taxpayer, are economically reasonable, and meet other FHFA credit risk transfer principles.”


The GSEs regularly transfer portions of their credit risks in both single- and multi-family mortgages to the private sector. The FHFA’s Progress Report provides a summary of those transactions. “Fannie Mae and Freddie Mac have made credit risk transfer a regular part of their business and they continue to improve and expand the scope of their programs and explore different transaction structures,” FHFA Director Melvin L. Watt said. “This report demonstrates the ongoing innovation, the progress being made, and our commitment to transparency as we continue to enhance these programs.”


Since the Credit Risk Transfer program began in 2013, the GSEs have transferred a total of $49 billion in credit risk and $1.4 trillion in unpaid principal balance. Another $731 billion in UPB was transferred to primary mortgage insurers from 2013 – 16.


Risky Business? New Loan Mods Re-default at Higher Rates

Analysts at Fitch have found that loans modified after 2014 have higher re-default rates. The data was published was part of the company’s “Historical Modification Data Review” which analyzed Fannie Mae’s dataset for modified single-family mortgages. The dataset contained 700,000 loans and a $135 billion balance. Of these, 448,000 loans were still active with an outstanding balance of $75 billion.


Based on the data being collected since 2009, there is a strong tie between new loan modification and higher re-default rates. Analysts found that loans modified after 2014 have higher re-default rates, with 2015 being the highest since 2010. The report cites weak credit attributes as a possible cause for the spike since the average FICO score was only 592. These loans re-defaulted quickly after modification, seventy-five percent of them within the first two years alone.


Traditionally, loan-to-value (LTV) ratios and credit scores are risk predictors, but the report stated that “loan modification terms play a significant role and there is direct correlation between the amount of the payment reduction and re-default rates. Borrowers who received multiple modifications have higher re-default rates.”


The majority of the loans included in the report were modified per one of the following three programs: Home Affordable Modification Program (HAMP), Streamlined Modification Program (SMP), Standard Modification. Unlike HAMP and Standard Modification, which use step-up mortgages and require documented hardship, SMP doesn’t require the borrower to have a documented hardship and focuses on fixed-rate modifications.


Although SMP loans comprised much of the outstanding balance in the dataset ($35 billion, or 47 percent of the overall balance), the highest re-default rate is found in Standard Modification loans. These borrowers typically don’t qualify for HAMP or have defaulted on HAMP before. Fannie Mae plans to replace Standard Modification in late 2017 with the Fannie Mae Flex Modification Program. HAMP loans had the lowest re-default rate out of all three programs.


The analysts predicted that the trends identified in Fannie Mae’s historical dataset are predominant in loans not only owned by Fannie Mae, but other institutions as well.



Economist Responds to Carson’s Call for Input on Housing Needs

Carson also said that under his leadership, HUD would offer equality and fairness to all. “One of the things you will notice in this department under my leadership is that there will be a very big emphasis on fairness for everybody,” he said. He also talked about finding alternative ways to work with the private sector to find solutions to alleviate homelessness and affordable housing availability.


Richardson agrees that something needs to be done because “Income inequality and a shortage of affordable housing are at the worst levels we’ve ever seen in America,” she said. “The country needs a commitment to more progress, from the basic, immediate needs like access to affordable housing to longer-term solutions like increasing homeownership levels among the middle class.”


More specifically, Richardson offered these suggestions in a recent Redfin blog post:

  1. Carson should create a national housing plan. “We are quickly heading toward a future in which the middle class can no longer live where the good jobs are. Dr. Carson can reframe the housing crisis into an economic issue with regional and national importance.”
  2. HUD should increase the use and subsidy amount of housing vouchers so that working families can move to thriving communities where jobs are available. She said that too often a person’s zip code determines their economic mobility, and only one in four families that qualify for federal assistance actually receives it.
  3. HUD under Carson’s leadership should encourage deregulation of restrictive zoning rules to improve local housing policies. “That’s where the crisis starts,” Richardson said, “at the local level, when people vote against inclusionary zoning policies. This makes it difficult or impossible to build higher-density, affordable housing in a community.” She said that HUD can reward communities that change to inclusionary zoning practices by offering them federal infrastructure investments to improve the neighborhoods. That way inclusionary zoning is more appealing to longtime residents.
  4. HUD should encourage investment through the Low-Income Housing Tax Credit Program. She said that HUD can influence builders to invest in affordable housing near America’s job centers, thereby increasing economic mobility for working families. In addition, at the same time, HUD can fund investments in poor rural and urban communities.


Richardson feels that HUD, under Dr. Carson’s direction, needs to implement these actions. “An across-the-board investment in affordable housing, in combination with sorely needed transit and infrastructure spending, will ensure that no neighborhood in America suffers due to isolation and neglect,” she said. This is necessary, she believes, to ensure that no family is isolated from economic opportunity simply because of where they live.