BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG: November 2007

A friend sent me this earlier this evening.

"When in England at a fairly large conference, Colin Powell was asked by the Archbishop of Canterbury if our plans for Iraq were just an example of 'empire building' by George Bush.

"He answered by saying...

'Over the years, the United States has sent many of its fine young men and women into great peril to fight for freedom beyond our borders. The only amount of land we have ever asked for in return is enough to bury those that did not return.'

"It became very quiet in the room."

Bill Cherry, Realtor

While I never thought I could afford to stay at the Carlyle Hotel on Madison Avenue in Manhattan, I spent many evenings in the windowless Café Carlyle enjoying the music of famed cabaret singer-pianist, Bobby Short.  In fact I was there so often over the years, that we actually became first-name basis friends.

When Bobby died of leukemia in March of 2005 at 71, it became apparent to me that those who entertained small houses of live audiences, night after night, were vanishing and there were few, if any, replacing them.  A tragedy in the making.

Bobby Short was to the Café Carlyle what Sylvia Sims was to the Oak Room at the Algonquin Hotel.  And she's gone, too.

And while Michael Feinstein has his spot at Lowe's Regency, he is rarely there tp perform, preferring instead to tour and play for large theater audiences. 

BUT THERE IS A BRIEF BREATH OF FRESH AIR! Through December 5^th, Houston singer-stylist-gone-national, Steve Tyrell will be performing in Café Carlyle.  If you can be in the city then, it would be a great addition to your trip if you would stop in and experience this almost lost style of entertainment.  Steve will do a fabulous job!

And while you're there, have a quiet toast at your table for Bobby, too, and know that I'd sure like to be at the table next to yours.

Bill Cherry, Realtors

Even though I'm a Dallas resident and business man now, most of my life was spent living in the Galveston-Houston area.  My real estate company had two offices in Galveston and one in the museum district of Houston.

And from the age of fourteen, my avocation has been performing on radio and television.  I still do.  I found this script of a piece I did on TV's News-24 Houston on June 21, 2003, and I thought you would find it interesting. 

Bill Cherry's Memories -Sinatra Visits Galveston

People past 60 who lived or came to this island in the old days, love to tell the tales of when big-time stars headlined in Galveston.

Night clubs like the Sui Jin and the Hollywood Dinner Club and the Balinese Room and the Studio Lounge booked entertainers like Fred Astaire and big bands like Harry James.

Most of us refer to it as Galveston's Golden Days, but those golden days only had a span of thirty years. From the 1920s through most of the 1950s.

And that sure is a small piece of time...actually just 17%.... out of the 175 years the island's had civilized people living on it.

My favorite story from that era is when old Frank Sinatra was down on his luck. He was an almost has-been even though he was just 35-years old. We're talking about 1950. And wouldn't you know that's when he was married to glamorous movie star Ava Gardner. And she was making tons of money.

Desperate for a job, somehow he talked legendary oilman Glenn McCarthy into giving him a short gig at Houston's Cork Club, a plush private nightspot on top of McCarthy's legendary Shamrock Hotel.

Bill Roberts, a Houston gossip columnist, reported that Ava Gardner came to Houston with Sinatra, but nobody ever saw her ringside at his shows. The truth is, she wasn't there, and it was because their marriage was on the rocks.

Sinatra started driving to the island almost everyday. He came to pester Sam Maceo, owner of the Balinese Room, into letting him follow the Cork Club gig with one at the Balinese. If Maceo didn't hire him, Sinatra had no place to go after the Cork Club.

Finally. Maceo said OK, but only as a singer with the house band. So Sinatra came, and he stayed in one of the Island's flea bag hotels, and he ate his meals on credit at Biaggio DeAndrea's Speedway Café, right next to the famous Mountain Speedway roller coaster.

Within two years of his down and out Galveston gig, Sinatra moved back on top, but this time as a movie star in "From Here to Eternity." That's a story in itself.

But Sinatra never forgot his Galveston gig and the benevolence of Biaggio DeAndrea and his Speedway Café.

A few years later, Sinatra campaigned for the election of John F. Kennedy for president. When Kennedy won, he asked Sinatra if there might be a handful of people he'd like to have invited to his inauguration.

One Sinatra picked was his friend at the Speedway, Biaggio DeAndrea. And sure enough, a fancy embossed invitation was sent. DeAndrea didn't go, but that invitation was thumb tacked on the wall behind the lunch counter for all to see until the Speedway closed years later.

And Biaggio told me Sinatra settled up his tab at the café, too.

I'm Galvestonian Bill Cherry, and Frank Sinatra's visit to Galveston is one of my memories.

Copyright 2003 - William S. Cherry and Belo

Bill Cherry, Realtors

If you're like most of us in the real estate business, it seems most people we chat with eventually get around to asking, "How can I get rich investing in real estate?"  It's a question I really try to shy away from because I am convinced most people can't do it, even if their stars are perfectly aligned.  They don't understand the commitment.

Nevertheless, probably like you, over the years I have read many of the books on the subject, I've seen the "systems" sold through television infomercials, and I've heard the fellows on the radio pushing mentor seminars.  The latter is the scariest of all.

Honestly and in reality, answering that question is problematic.  The major considerations for anyone thinking about becoming a real estate investor are 1) do I have the talent to do it 2) do I have the discretionary income and savings to finance it, 3) will I be willing to devote the time, every day, day in and day out, that is required, and 4) can I intellectually understand that real estate investing is not made for the short term investor?

When I first decided to take the plunge myself, I was a commercial real estate loan officer for a major bank.  My wife was an accountant.  Frankly, we were young, just getting started, and we needed to make more money.  We had two of the skills that were important: number sense and a fundamental ability to analyze investments.  We were both good with our hands, and her dad, who lived nearby, had been doing handyman work for years.  He could help by answering questions.

After looking through many books on the subject at the public library, I found one by a fellow who by day was a telephone installer and by evening bought, renovated and rented out and managed a series of houses.  The real estate had made him a millionaire. 

His book was a step-by step autobiography of his real estate deals.  It was a conservative and hands on approach, an approach that seemed to have very little risk. 

My wife and I decided that we would become his disciples.  The first edition of the book was titled How I Turned $1,000 into a Million in Real Estate in My Spare Time and it was later updated to How I Turned $1,000 into Three Million....The author was William Nickerson.

We followed his formula and bought, renovated and rented out our first house.  Each time we got ready to add another property to our investment portfolio, we reread the book.  Each time we had a question of how to approach a problem, we looked for his example in the book.  Everything was there, even those things we had totally forgotten since we last read it.

Over the years, we bought a significant number of properties, always following Mr. Nickerson's advice.  And early in that period, I resigned from the bank and she resigned from the accounting firm where she worked, and we opened our first real estate company.  It was called The Old House Company, and a major reason for that business' success was that our own history as mom and pop real estate investors was well known in the community.  Although we sold the company in 1990, it remains in business today.

William Nickerson's formula still works, and it is still the only one of the real estate investment books, systems, or programs I ever recommend to someone who is considering beginning a sideline in real estate investing.  Even though Mr. Nickerson has been gone for a long time now, his book is still available at Amazon.com in used condition, and you can buy a copy for ten bucks, maybe less.

How I Turned $1,000 into a Million in Real Estate in My Spare Time is a book that does what is the most important.  It keeps your feet planted firmly on the ground.

Bill Cherry Reators

Copyright 2007 - William S. Cherry

SUNDAY IN THE PARK WITH BILLCHERRY-- a Regular Sunday Feature

VOGUE.  "The first illustrated fashion magazine grew out of a weekly society paper that began in 1892. In 1909, a young publisher, Condé Nast, bought the paper and transformed it into a leading magazine that signaled a new approach to women's magazines."

Dallas' NorthPark has in the concourse between Nordstrom and Neiman-Marcus, a worthy display of Vogue's original fashion photographs.  I am totally enamored by the young woman posed in a long white silk gown with a harp of broken strings in the background.

Photography is an important art form that, in my opinion, has never gotten its just recognition.  These Vogue photographs should be evidence of that to anyone who sees and studies them.

IDENTITY THEFT.  The three major credit reporting bureaus, Equifax, Experian and Transunion have initiated a new service.  For a fee of $10 each, they will freeze your credit files so that identity thieves cannot get credit cards in your name.  For another $10, you can allow the freeze released for a legitimate inquiry. 

MAKE ME CRAZY.  There is no reason whatsoever to say, "He's a Jewish rabbi."  There are no other kinds of rabbis.  Please don't use "myself" without preceding it with "I" or "me." "As far as myself is (am) concerned," is incorrect.  "As far as I, myself, am concerned," is correct.  When you write the word "it's" there is a huge chance that you mean "its."  "It's" is not the possessive of "it."  So always double check.

MORTGAGE PREPAYMENT PENALTIES.  It turns out that these darned things, once on the way out, resurfaced during the race of recent years to buy/refinance homes while interest rates were unusually low.  Those with adjustable rate mortgages are now finding that to refinance and get out from under the rising rate will cost them a serious penalty.  It's past due for the government to make prepayment penalties illegal.

INTER-STATE BATTERIES.  This began as a mom and pop business that, for the first time ever, brought honor to the car battery business.  You buy a battery from these people, and if it fails during the warranty, any dealer who sells Interstate will stick a brand new one in your car, no fuss, no muss, no questions, no money.

The company, headquartered in Dallas, has been run for years (since 1978) by Norman Miller.  Two hundred thousand dealers now carry the Interstate battery.  But what is interesting is the amount of time and energy and money Norm and his wife, Anne, have put into their own Christian ministry.  His autobiography, Beyond the Norm is quite a testimony.  It's sold thousands and remains available at Amazon.com, and last week I saw a handful of copies at the Dallas Half-Price Books.  How it starts and how it ends will surprise you as well as give you hope.

DUMB WORDS.  Jeffrey Gitomer has done a good job of writing how-to-sell books.  In one, he lists some words that are sure to get your prospect to mentally turn you off.  Here they are:  today, frankly, honestly, if I were you, or anything negative about a prospect's choice.

RISING ABOVE SORROW.  This is a 200-or-so page book of "stories of lives renewed" that was edited by Phyllis Hobe and is one of the books in the Guidepost series.  For years, I have tried my best to give friends and clients some symbol of hope when they've lost a loved one or are in some other deep trauma. I think that's the thing to do.  Published in 2005, this has become one of them that I frequently give.  

RELIVING THE ‘50s and ‘60s.  "An American Graffiti" got it right when the story involved a drive-in.  No one could ever have been happier than I was and continue to be, that my teen years and young twenties took place then.  And for me, it was the drive-ins that spanned Galveston's famous seawall - the Surf, Boulevard, Crow's, Keith's and Prince's.

In Dallas, near the corner of Northwest Highway and Abrams Road, is Keller's Drive-in.  It's where regular folks have a section of the lot, bikers have another section, and vintage car owners have another section.  All coexisting.  And the catalyst is the drive-in hamburger that no - not one - franchise or inside restaurant has ever come close to replicating.  At Keller's the burgers still come wrapped in waxed paper, the buns have poppy seeds, the lettuce is shredded and the onions are grilled.

Two people can each have burger, fries and soft drink and tip the carhop for eleven bucks.  Then, it'll be all you can do to keep from burning rubber as you leave.  They all know us there.  Tell 'em Patty and Bill sent ya!

SALVATION ARMY KETTLES.  In Dallas the Christmas kettles that the Salvation Army has put out at store entrances for as long as I can remember, are up early this year.  The Salvation Army is the only charitable organization that I know that is genuinely happy with small donations. Please put a nickel, dime, quarter or dollar in each kettle as you pass them during the Christmas season.  You'll be amazed at the joy it will bring you.

CURSING. Conservative talk show host and scholar, Dennis Prager, made an interesting observation last week.  He noted that cursing and swearing in public conversation is generally an accepted and used behavior among the political left. While I had noticed its occurrence, I hadn't thought about its being peculiar to one particular group.  Looking back, I think he may be right.  Frankly, I personally abhor it.  It's not amusing, funny or hip.

Drawing of Man in the Park by Carlotta Barker.

Bill Cherry, Realtors

Copyright William S. Cherry - 2007

Enochenza and Margaratte Venza, came over from Gibellina, Sicily about 1900, and they opened a small grocery store in Beaumont where they also had a butcher shop. About 1905, Sam and Frances Tramonte and their son, Jasper Tramonte left Gibellina, came to America, and Sam and Jasper went to work for their friends from the Old Country, the Venzas.

After they learned the butcher trade from the Venzas and enough English to get by, the Tramontes moved to Galveston, opened a butcher shop, and with the help of the black market, stevedores, and the business from loads of small Italian corner groceries that were sprinkled throughout the city and the county, they built a multi-million dollar meat processing business, High Grade Packing Co.

With his new wealth, Sam sold out his interest in the business to his son, Jasper, divorced his wife, moved back to Gibellina where he bought a big castle, and lived the remainder of his life in the style of a Sicilian Hugh Hefner.

After World War II, the packing company started having its ups and downs as Jasper's sons were finishing their formal educations and began being integrated into his business.  Oddly, new competition arose and business at the High Grade started to slip.

Through some rather long and involved fluke circumstances, Jasper learned of a well-thought of man, Cecil Smith, who had a reputation of being able to make packing companies that were at best limping along, very profitable.

And over the next twenty-five years, he and Jasper desperately tried to learn to mix Jasper's old country style with Smith's American style. They had their ups and downs. Smith would quit, move elsewhere, and before long Jasper would call to make peace and invite him to come back, and he'd come.

And then Jasper's son Sam J. died, and Jasper couldn't believe it.  Sam's wife, Ernestine went back to teaching school to earn the money necessary to pay the family bills and educate her four sons.

After a few years, Ernestine's boys - J.E., Sammy, Vallory and Darryl - decided that enough time had lapsed, and that Ernestine needed a husband and they needed a stepfather. So without consulting her or getting her permission, they picked Cecil (Smitty) Smith as the prospect, and they began their campaign to get them to date. The easiest way, the boys figured, was to invite their mother and Smitty to double date with them.

The plan worked. Smitty and Ernestine fell in love and married.

Meanwhile, Jasper died and a few years later, the High Grade Packing Company closed for good.

In honor of all of this, Darryl Tramonte has opened a web store that markets many of the products that the High Grade was famous for, as well as recipes that Miss Ernastine cooked up for Sunday dinner.  If you do nothing else, get yourself a couple of bottles of  ERNA'S SUNDAY SPAGHETTI SAUCE. You're going to love this.

HIGH GRADE PRODUCTS

BILL CHERRY, REALTORS

On weekends, a number of the Dallas radio stations broadcast infomercials for various people who earn their livings as financial advisors, stock brokers, real estate investment "mentors," and those who want to tell "already old people" how to tweak their remaining assets so that they will not outlive them.

I assume you can hear similar programs where you live.

Often times I find myself screaming at the radio as if the guy on the other end could hear me saying, "That's not right," "You're nothing but a crook," "Why does the radio station allow your to make such claims?"

Most certainly all of them do not fall into the questionable information-advice category, but a serious portion of them in the Dallas area, at least, do.

People are not corporations or perpetual trusts.  They do not have the option of perpetual life nor level mind, tools or physical being to have continuous earnings.  People have to earn it, live on it, and save it while they can because at some point the only financial friends they will have left are their saved assets, their pensions, Social Security, and the ability to tap welfare if and when all of those fail.

It is improper to advise people to invest and operate their personal finances as if they were a corporation or a perpetual trust; yet, in reality that's what many of these investment hucksters promote.

In the days before pensions, Social Security, and substantive health care insurance, most young families spent a part of their lives and their income taking care of at least one parent who could no longer sustain his own financial needs. 

Preservation of human dignity was important. 

In my own case, while it was never mentioned, I now realize that my daddy and mom financed the well-being of their mothers and my mother's aunt.

My daddy told me any number of times that the one thing he could guarantee me was that he and my mother would be able to comfortably live for the remainder of their lives without ever having to depend on their children for help...and he was telling me that when he was no more than 40-years old.  And it turned out as he promised.

So what is a good approach?  Here are some empirical rules, no matter your wealth, current income or what you perceive as your personal financial well-being.  Live by them, and you'll do fine.  (Yes, my daddy and mom did live by them.)

• Home ownership is not a proper investment tool to fund future retirement.
• All anticipated future needs should be guaranteed with the appropriate amount of permanent life insurance.  Term insurance, while it has a very valid purpose in most financial portfolios, does not replace the reason for permanent insurance
• Far more important than picking the "perfect" investment vehicle you will use to accumulate wealth, is picking one and then using the principal of Dollar Cost Averaging* for the remainder of your employment years
• Real estate is an improper investment when its rehabilitation and unexpected losses will be funded by anything other than the discretionary income of the investor or the conservative estimate of the net income the property can be expected to generate
• There are a number of sound-based insurance products that allow the policy owner to invest cash and at a reasonable return without exposure to current taxes and without exposure to loss as a result of bankruptcy or court ordered judgment. This is where windfalls belong...the Christmas bonus, an inheritance, etc.
• The commonly stated axiom, "buy term life insurance and invest the difference in equities" is a direct contradiction to the purpose of insurance and equity investments
• Most investment plans fail for one of three reasons:  1) the plan was never initiated 2) the plan was not religiously followed to completion, 3) the investment was tapped for cash to buy, say, a car.  It is rarely because the chosen investment vehicles were totally inappropriate, i.e., the mutual fund did not perform well, CD interest rates/bond rates went down
• During your lifetime, donations to charities, hospitals, libraries, and on and on should only be made from discretionary income, not in lump-sum gifts.  Large gifts should be made as bequeaths in your will or trust, or through a beneficial interest in a life insurance policy 
• Do not loan money to your children, relatives or friends after you have retired
• Do not give money to children, relatives or friends after you have retired
• Do not co-sign bank notes for anyone, including your children, relatives and friends, at anytime.  Period.  You are not a bank.  If they are unable to borrow from a bank, it's because they are judged a poor risk
• Under no circumstances should anyone other than your spouse be listed as a co-owner of your home, bank accounts, investment accounts, etc.  If you've done this, take them off today!  This is very important.  If you want them to have access to your accounts, you can do this by giving them specific powers of attorney
• Reverse mortgages are rarely a good thing
• Refinancing and home equity loans are a poor solution to bailing out your unsecured credit card debts and/or paying off cars and other bank loans, and,
• Keep the beneficiary designations current on your life insurance, pension and retirement trust accounts.  Those designations are NOT over-ridden by anything stated to the contrary in your will.

* Dollar Cost Averaging is an investment principal whereby the investor makes the same dollar amount investment regularly, say on the first day of every month he purchases $100 of ABC Mutual Fund shares, regardless of the price per share.

So back to the radio commentators whose thirty minutes of investment advice is preceded and followed by an all-encompassing disclaimer by them and the radio station.  To claim that they can show their clients how to safely (guaranteed) invest their money in vehicles whereby there is no chance of loss, yet the return will approach, say, Harvard University Charitable Trust (14% return over 20-year period) is ridiculous.

In yesterday's blog, I wrote about Paxton Kelso.  He considers these principals as he reviews your investment needs with you.  Patxon primarily services people in the early years of their business life.  My friend, W. Neil Gallagher, Ph.D., is known in Dallas as the Money Doctor.  He considers these principals when he is advising those who are nearing retirement age or who are already there. 

While I know that both of these men are properly educated and ethical, nevertheless, no investment plan should be initiated or maintained without the inclusion of your own good judgment, and none should be initiated on the spur of the moment, irrespective of what their value may be to your future.

Bill Cherry on the Web

Recently a number of Dallas media sales people have contacted me.  They want to convince me that buying into an advertising program with them will bring my message to the Multitudes, and that our business will dramatically increase.

By shear accident, in all but one case, I have found that each of them is advertising his own home as a For Sale By Owner.  Of course they don't know that I've stumbled upon the truth.  They do know that I have declined to do business with them.

I wonder if they will ever figure out the reason why?

Loyalty is very important in establishing and maintaining relationships.  Odd how few salespeople ever learn and practice this. 

And then there's the Yellow Page ad.  This past season I purposely used a special phone number for my Yellow Page ad so that I could measure the response.  The twelve month contract period ends in December.  Two calls have been generated by that ad during the past eleven months.  Both were from people soliciting me for business.  Of course you can't stop a Yellow Page ad mid-contract.  You're stuck for a year.

I won't be buying any more Yellow Page ads.  That medium I am now convinced is a total dinosaur.

Paxton Kelso's dad, Larry, has built a name for himself in commercial real estate brokerage circles here in Dallas.  And Larry's been associated with the best, including the prestigious firms of Ebby Halliday and Roger Staubach. 

I spent many Sundays after church at Larry's grandfather's summer home on Offats Bayou in Galveston.  His name was Walter A. Kelso.  And Larry's father Rai and I were lifelong friends.

Good grief, it just occurred to me, I remember when Larry was born.

Larry emailed me awhile back and asked me to meet his son, Paxton, whom I didn't know.  Since Paxton and I are both trying to build our personal businesses here in Dallas, Larry thought we might be able to cross-collateralize our contacts and help each other. 

So Paxton called and we met at a Starbucks near his office.  He's a financial representative for Northwestern Mutual. 

And his job, as he sees it, is to guide young people so that they are totally prepared to financially meet the Eventuality Chapters along the way -- educating their children, being prepared for emergencies, and being financially secure when retirement comes along.

That's a tall burden to put on yourself, because most young people aren't disciplined enough to follow a financial plan, and to make matters worse, Paxton is competing with many others who are pushing their products - some good, some bad.

So when Paxton and I finished our getting-to-know-each-other-chit-chat, I started seriously quizzing him to see if he was actually prepared to evaluate clients' financial patterns, and deliver them recommendations that could, with discipline, meet their goals.

Remember, I went to graduate school to learn this stuff.  I've taught it in one university and one community college, and have written about it for years, including one piece for "Fortune Magazine."

Paxton easily met my test. 

You see, contrary to what it's considered cool to say:  1) Buy term and invest the difference and 2) annuities are inappropriate investments, the facts are that most people fair much better when they buy permanent insurance (whole life and universal life) and when they convert a good portion of their savings to some annuity-certain products when they retire.

And people who are virtually self-employed and work on commission like us Realtors, are especially likely to put off making the necessary preparations.

Financial planning requires a very delicate balance of products so that a person won't outlive his money or have to compromise his dignity. 

For young people just starting out, Paxton Kelso is especially good at zeroing in on the tailored plan they'll need to meet their goals.  You can get in touch with him at 972 980-2014 or by email at paxton.kelso@nmfn.com

Bill Cherry, Realtors