Team Lally Show with Bill McRoberts
Certified Divorce Financial Analyst, McRoberts & Associates
Announcer: It’s time to enter the world of real estate in Oahu with Hawaii’s only true real estate radio show, the Team Lally real estate show. Grab a pen and get ready to take notes! For the next full hour, Hawaii’s premier real estate leader, Adrienne Lally and Attilio Leonardi will bring you the latest in real estate news and real world strategies on how they can guarantee to sell your home at a price and deadline you agree to! Or they’ll buy it! Now, here are your hosts, Adrienne and Attilio!
Adrienne: Welcome to the Team Lally real estate show, home of the guaranteed sold program or we’ll buy it. If you have any questions just give us a call at 799-9596 or check us out online at www.teamlally.com.
Attilio: Well hey everybody this is Attilio and this is the part where I do the old disclaimer and I used to do the mom story but I want to go into, straight into a pearl of wisdom instead so I’ll get it out of the way real quick. If you hear anything on the show that sounds like tax or legal advice, that’s not what we’re giving. If it sounds like it, it’s purely anecdotal. Check it out with your neighborhood professional. Alright, so I want to talk to you guys about the power of the smile. You know how powerful a smile is? And I’m talking about, not anecdotally or you know, touchy-feely kind, I’m talking about actual scientific study. So, they did a, how’s this for a scientific study, 30-year longitudinal study. I don’t even know what that means, it just took a long time and they gathered a bunch of information. This is what it is in a nutshell. They took a look at yearbook pictures and they looked at the people who had just a, the, they measured the width of their smile and the intensity of the smile in their yearbook picture and ran a correlation with their, you know, some base parameters for success and they found out that the people that smiled, now granted, there’s some aberrations, you just could’ve had a bad day that day. Broke up wiht your girlfriend or boyfriend, you know, all that turmoil that happens in high school. But what they found was that 30 years later, the people that had the biggest, most sincere smiles, and by the way, you can determine a sincere smile because a smile goes up to the what?
Adrienne: The eyes.
Attilio: Goes to the eyes! If someone is smiling and you can’t tell in the eyes, it’s not sincere. And you cannot fake that. You can’t fake it. So, unless you’re a psychopath. Psychopaths can fake anything but they have a disconnected part uh, with the amygdala in their brains and it’s real shrunken and they just, you know. They don’t even cry at their mom’s funeral but anyway, so they did this with the yearbook photos, 30 years later and statistically, they showed that het people were more successful, happier, who had genuine smiles in their yearbook photos. They did the study again, uh, with baseball cards. Because a baseball card has a picture of the baseball card player, correct?
Adrienne: Yes.
Attilio: What they found is on average, that the baseball card player, so they looked at baseball cards in the ’60s and then obviously, you project forward to today and these are very old men. The ones who had smiles that were the biggest and sincerest lived statistically, they didn’t even ask them any other questions, just looked at, are they alive or are they dead?
Adrienne: Are they alive, mmm-hmm.
Attilio: 8 years longer.
Adrienne: So, smiling can increase your lifespan.
Attilio: British researchers found that uh, the, the response or the stimulus in your brain of a sincere and genuine smile, is equal to 2,000 candy bars of chocolate.
Adrienne: That’s a lot of chocolate.
Attilio: So, the, here’s the point.
Adrienne: Smile. (laughing)
Attilio: Without the calories, of a, of 2,000 chocolate candy bars, smile. They also found that when you smile, your perception to the person receiving this information from you, the non-verbals is that you’re more confident. When you smile. Anyway, there’s—
Adrienne: And happy, too!
Attilio: This is from a, a scientist, he did a TED talk on this, just about smile uh, if you listen to podcasts, it’s TED radio hour. And it was the series on success and there was a segment in there from this scientist that talked about the power of the smile. Alright, you’ve got our quotes for today?
Adrienne: Well I’ve uh, I’m taking some uh, some quotes from Big Ideas on Leadership. And the quotes are from Confucius.
Attilio: Confucius?
Adrienne: Confucius says. “Choose a job you love and you’ll never work another day in your life.”
Attilio: Yeah.
Adrienne: So, what the leadership book says, is that real leaders have 2 key challenges. “First, find what makes your heart sing by discovering your gifts and talents. Second, help others find what makes their heart sing. Place people in jobs that bring them joy and set them up to succeed.”
Attilio: Read the quote again.
Adrienne: “Choose a job you love and you’ll never work another day in your life.”
Attilio: So, I want to talk o you guys about Mike Rowe. Do you know who Mike Rowe is?
Adrienne: The Dirty Jobs.
Attilio: He’s the Dirty Jobs guy! Uh, pretty, pretty intelligent guy, he was on uh, he was being interviewed on uh, on a TED talk and they talked to him about, you know, what did he learn from working with all these people with all these weird whack-a-doodle jobs you know, cleaning septic tanks, uh, collecting all the food from all those buffets in Las Vegas and feeding them to pigs. You know, just all these jobs that people are like, I don’t, you know, that’s, oh, here’s one! Oh, on the smile thing, this is what Mike Rowe says. People who are the roadkill picker-uppers, they actually whistle when they work.
Adrienne: Really?
Attilio: Yeah, so they’re like (whistling) oh, here’s a doggie pancake (whistling).
Adrienne: That’s horrible!
Attilio: Oh, here’s a cat pancake. (laughing) They actually whistle while they work. Oh (whistling) here’s a mongoose, but it wasn’t a pancake, it was a smear.
Adrienne: So, if you can’t whistle, then you cannot, you cannot do that job?
Attilio: Anyway, this is what Mike, so Mike got this, Mike Rowe got this uh, this piece of wisdom and everybody has it. “Follow your passion,” and you know what he says about that advice?
Adrienne: It’s junk.
Attilio: It’s the worst advice he’s ever been given because what if following your passion is not something that pays the bills and allows you to have a home and food on the table? Then you’re screwed! So, what he says was, turn that around and look at it in a different way. Whatever you’re doing, bring passion to it.
Adrienne: Yes. That’s important and I, I wanted to uh, kind of add on to this singing heart uh, tip, this leadership book. We, we have recently gone through a course called Career Visioning. Where you know, we learned how, you know, how to make sure that our people are on the right seat on the bus and that they’re the right fit and uh, we were, I guess we were discussing yesterday like the best way to get to know somebody is what? To live with them.
Attilio: Is to live with them. But you’re not going to be living with people that you’re getting ready to hire or be in a partnership with.
Adrienne: No. So, the second-best is—
Attilio: Going camping?
Adrienne: Well that. And then just to take them through the career visioning process. So, you know, Attilio and I, we are in the talent search business. That’s what we are looking for, we’re looking for talent.
Attilio: Speaking of, speaking of talent search, you want to know what’s going on with the career of real estate? We have a career, we’re going to have a, well, when you hear the show—
Adrienne: We have a Career Night.
Attilio: Know that we have a Career Night. And it’s typically the first Monday of every month, uh, every other month, every other month—
Adrienne: So, you can go to our website, it’s there, or just go to www.jointeamlally.com and all the options are there.
Attilio: Now, they said uh, being clear is being kind. Being clear is being kind, so I’m going to be kind to you right now. When you go to our website, which is www.jointeamlally.com, we have a 3-step process. If you skip any of those steps, we will not contact you, because what, what did we, what did you, what did we just test right in, in that situation?
Adrienne: Not our job to follow up with you.
Attilio: Well, we’re testing can you follow instructions?
Adrienne: Yeah.
Attilio: There’s over 500 steps that takes to help someone buy a home or sell a home. Lots of instructions, lots of details.
Adrienne: And if you can’t follow 3 steps, then probably we’re not a good fit.
Attilio: Yeah, so follow the instructions. If you skip any of the steps, if you skip any of the steps, think about it folks, if you’re a homeowner, with all the money we make as realtors and how much money they’re paying us, do they want a realtor that skips steps?
Adrienne: No.
Attilio: No.
Adrienne: It’s a quick way to get fired.
Attilio: Okay. So, we’re always looking for talent, we’re always looking for talent, you don’t necessarily have to have any real estate experience, you know, there’s the one thing that we do, we hope you have and we cannot give you and that’s grit. What is grit?
Adrienne: That is the ability to follow through ad just get things done, no matter what. No excuses, just do it.
Attilio: And I want to tie back to what Mike Rowe said. It’s not, stop following your passion. You know, granted if you’re uh, a violin virtuoso and you’re playing in the Boston Symphony, you know, great! You’re doing something that you’re passionate about but that’s very far and few between in the real world that people are doing things that they’re passionate about, so again, coming back to it, you know, when you’re in elementary school, when you’re in kindergarten, first grade, and the teacher said, Adrienne, what are you going to be when you grow up, what did you say? Did you say I was going to be a realtor?
Adrienne: No, actually that was the last thing that I wanted to be! (laughing) But I wanted to be an Olympic gymnast.
Attilio: And how did that work out?
Adrienne: Well, it worked out pretty well until I started to grow.
Attilio: You got too tall.
Adrienne: I got too tall and then I became a coach.
Attilio: You hit your head on the uneven bar because you’re too long.
Adrienne: (laughing) No, no I did, I broke my back. I over-rotated on a, on a skill.
Attilio: Oh, it’s that old, I broke my back excuse and I can no longer be an Olympic gymnast. How many times have I heard that one?
Adrienne: So, I had some setbacks and it was, so I had to, I had to zig and zag and I ended up coaching for quite some time after.
Attilio: But have you taken that passion of uh, of practicing hours and hours a day while all the other kids were playing and watching cartoons and have you put that passion into your real estate business?
Adrienne: Absolutely. I also instilled that passion into my children as well.
Attilio: Alright, so that’s what we’re looking for people for, for joining our team, uh, that’s the type of team members that we have if you’re, if you’re someone out there buying or selling, if you’re going to be working with us. And we always tell you uh, don’t hire us.
Adrienne: Interview us.
Attilio: Just interview us, give us an opportunity to, to, to earn your business but don’t automatic, we don’t, we have no assumptions or, or braggadocios thoughts that you will automatically work with us. We’ve got to earn that opportunity every single time, no matter how long we’ve been in this business or what our track record is.
Adrienne: So, so speaking of grit and track record, I wanted to talk a little bit about uh, Hawaii Pacific Property Management. Since uh, I think, I think Duke is still out of town, but he’ll be back next week.
Attilio: That’s okay, the rest of his team’s in town.
Adrienne: They are, and they are busy! I think that they brought on like 10 new, 10 new owners this month. So, they have a, a rent guarantee.
Attilio: Rent guarantee, you know what that is?
Adrienne: Yes, I do! Do you—
Attilio: No, no, no, you’re supposed to say, no, tell me—
Adrienne: No, oh, no, tell me more.
Attilio: Oh okay, so, the rent guarantee is this: if they can’t get your home rented in an agreed-upon rental rate in the first 30 days, they will pay the rent. Now, Adrienne, how can they make such a crazy statement?
Adrienne: Well because they’re, they’re good.
Attilio: They’re good? How so?
Adrienne: They can, they market the property, they take pictures, they take video, they push it out to multiple sites, they also know how to price the, the home properly to attract the, you know, the, the right kind of tenants. But then they screen them, they make sure that they are the best fit.
Attilio: Now we uh, uh, we just sent out a video to our huge database and it was the number 1 mistake that investors make and it has to do with property management. What was it?
Adrienne: It was that they don’t keep their rent up with the market, the market value, so you’ve got to always be checking back in, making sure that you are in line with the market.
Attilio: Now, this is what happens. Homeowners who rented, who managed properties themselves end up leaving the rent at, where it’s at when they first brought the tenant in and then years go by, they don’t raise the rent, tenant doesn’t complain, they pay on time. Ah, we’ll just be nice people. You’re not being nice people and I’ll tell you why. Because what happens is people establish what we call habit loops, I learned that from Kevin Barcina. It’s called a habit loop. And what happens is, that their rent is an expense and all the other expenses and then their income and so what they do is they get, get into a habit of saying okay, this is how my expenses are, and then I’m going to take that disposable income, again, America, we’re like the worst at saving, and then I’m going, it’s just going to balance out, and we’re not going to have a lot of disposable income. So, what happen sis, when it comes time to get the tenant out because you want to sell your property and reap the rewards of all that equity, what do we, what’s the challenge now that we have with the tenant?
Adrienne: Well they, they have uh, all sorts of expenses and a, a low market rent, so they’re going to have a hard time finding another place that’s, that’s similar.
Attilio: Because they’ve eaten up, they’ve created an expense habit, an income habit, all of their disposable income is eaten up. Their kids go to school in the community, they’re probably working in the community, they’ve established roots in the community, and now they’re going to go try and rent a similar place like the one that you’ve been renting to them and they’re going to have a hard time finding the rent that they can afford because you didn’t move it up the scale as market went up in the rent.
Adrienne: That’s important to keep your rent close to where the market is, and actually Hawaii Pacific Property Management, they do free rental analyses all the time.
Attilio: So, if you’re a homeowner, if you’re a property owner, managing stuff on your won, you don’t want to pay the uh, the, the property management fees, you’d be surprised, they’ll do a market analysis and the rental rate that is at market value could probably be above, either at or above the property management fees and then guess what? When Super Bowl Sunday rolls around, they take the call for the plugged-up toilet on Super Bowl Sunday as opposed to you.
Adrienne: That’s right.
Attilio: From a litigious standpoint, tenant-landlord code in Hawaii favors the tenant. You don’t want to mess that up! And uh, in our industry, that’s the uh, probably 90% of the lawsuits have to do with property management.
Adrienne: Alright, so give them—
Attilio: Hire a professional!
Adrienne: Yeah, so give them a call at 445-9223, that’s 445-9223. Or check them out online at www.hipacificpm.com.
Attilio: Alright, let’s give a quick tidbit, tip from uh, Jodie Tanga, the Mortgage Genius, she talks about—
Adrienne: Is she on the line?
Attilio: No, no, no, no, we’re going to give it to her.
Adrienne: Oh, we’re going to give it for her.
Attilio: She’s so intelligent, she shared it with us, she talked about it the other day—
Adrienne: Oh, okay!
Attilio: And it’s uh, the uh, the uh, debt-to-income ratio went from 45% to 50%. Don’t quote us!
Adrienne: Call Jodie!
Attilio: Give her a call at what number?
Adrienne: You can give Jodie a call at 488-5510, that’s 488-5510.
Attilio: What that means in plain English is that maybe you may not have qualified for the home that you wanted, a couple of months ago.
Adrienne: Now you can!
Attilio: Give them a call! And go through that again. Doesn’t matter if you’ve got a pre-approval from 30-60-90 days ago, have them re-run the numbers because those uh, income-debt requirements have become uh, a little bit more liberal.
Adrienne: They’ve changed, that’s right!
Attilio: Anyway.
Adrienne: Alright, we’re going to take a quick break, but when we come back, we’ve got a, a very special guest in studio with us today.
Attilio: And uh, we’re going to be talking about, we’re going to be talking about that fun topic called divorce.
Adrienne: Yeah, so stay with us.
All: (laughing)
[Music fades to commercials]
Announcer: The Team Lally real estate show continues.
Adrienne: Welcome back and thanks for listening to the Team Lally real estate show, home of the guaranteed sold program, or we’ll buy it. I’m Adrienne—
Attilio: And I’m Attilio.
Adrienne: And if you have any questions just give us a call at 799-9596 or check us out online at www.teamlally.com.
Attilio: Alright, so our guest today came to Hawaii in 1970 right out of college after completing his BA uh, in Chemistry with a minor in Math. He has dabbled in real estate as a licensed agent and also has become licensed to sell securities.
Adrienne: He’s a long-standing member of the Hawaii Estate Planning Counsel and was one of the 3 founding fathers of the Hawaii Society for Certified Financial Planners. And he’s been active in the local financial circles for over 30 years.
Attilio: He’s had his own financial planning practice since the early ’80s and is here to talk to us about his many experiences uh, as a certified divorce financial analyst. Let’s welcome Bill McRoberts. Welcome to the show!
Adrienne: Welcome!
Bill: Well thank you! I appreciate that. Thank you for having me.
Attilio: Sure. So, uh, well local style, we like to kind of get to know the, the, the person a little bit before we get into business so, if you are from Hawaii, tell you, what high school did you graduate, if not, uh, how did you end up here in Hawaii?
Bill: Well basically I got, I got married in Colorado uh, and that was uh, I got here in 1970s, been here 47 years.
Attilio: Oh, wow, you’re a local now!
Bill: Yup! I would hope.
Attilio: And uh, so what uh—
Adrienne: But how did you get to Hawaii though? In the ’70s, what made you come?
Bill: Well, I got married to uh, a young lady that was going to school with, same place I was in Colorado and she was from—
Attilio: She’s a local girl?
Bill: Hawaii, yup. ___. And I was from New Jersey. And it’s like, okay, we have degrees, we don’t have jobs, where should we go? I thought, I’ve never been to Hawaii, let’s try that! So, that’s how I got here.
Attilio: Okay, you guys are like, we can go back to Jersey or we can go back to Hawaii. Okay, let’s just try Hawaii.
Adrienne: Good choice!
Attilio: Good choice!
Bill: I thought so.
Adrienne: (laughing)
Attilio: Alright, so, uh, you’ve, you’ve, you’ve had uh, a different path of travel here, gone, done and different things as far as your career. What uh, what was the turning point that led you to what you’re doing today?
Bill: Uh, actually I, I came over here with a degree in Chemistry, there weren’t any jobs for that. It was a, a guy in the insurance business who uh, contacted me and said how would you like to be a financial planner? I said, oh, that sounds like a great idea! So, I joined in 1973, got there and found out that the only financial product I had to use was whole life insurance. You know, so, uh, it was quite an eye-opening experience, but you know, and then in uh, the late ’70s the uh, there was a, this thing called Certified Financial Planner and I thought, oh, that’s kind of cool, so I ended up doing the bouncing ball, kind of punched all my tickets during the ’70s, that’s when I got my real estate license, securities license, insurance license, you know, all those things, but uh, eventually settled on the whole concept of planning the finances for someone.
Attilio: Gotcha.
Adrienne: And then uh, I guess more recently, or I don’t know how long, but, what made you move to really focus on this certified divorce financial analysis?
Bill: Well that was uh, yeah, because I’m also an enrolled agent with the IRS, so I did uh, I did the tax thing and we had a, we had a client that had a very, very bad divorce experience uh, she really wanted to keep the house and so, her husband actually took money out of the house, created a loan against it, and because there was so much equity in the house, when they split it up, she got the house, he got all the other assets, but she didn’t have any good income source to be able to keep the house. And, had we been involved in that from the beginning, we could’ve easily shown that she would never be able to keep it, even if she got it, and sure enough, couple years later, she had to do it, you know the real estate laws have changed and back then, she had a lot of gain that ended up getting taxed uh, so, she ended up losing the house, having a huge tax event and uh, you know, hubby walked away with, way more than he should have. So, and that was over 20 years ago and I, I found this thing called certified divorce financial analyst, and I thought, well how can we get involved in his and help people, you know, settle that financial part of it because there’s tax considerations, there’s income considerations, there’s just a lot of things, and quite frankly, the legal profession isn’t really trained in that area typically although a lot of the people feel like they, they understand it pretty well and that, that was the impetus for it.
Attilio: Yeah, you know, we had a situation where, uh, a buyer uh, decided not to have a realtor represent them and decided to go with a, with a, with an attorney and that’s all fine and dandy when interpreting the purchase contract, and all that, but as far as being able to go into the multiple listings service and look at a comparable, do a comparable market analysis, one, uh, the attorney didn’t even have access to that, uh, because one of the questions that we ask when we’re representing a seller is, how did you com up with your price? You know, what is it a dartboard, uh, you know, if, if, if this is your representation, then they should be able to help you with that, so, that would be, that was the learning take-away that ewe acme out of that situation is that, same thing in divorce, they understand the legal proceedings of it, but there’s a whole financial aspect of, of getting a divorce that you need careful analysis of.
Bill: Yeah, and you bring up a great point, too because real properties, especially in complex cases, which is where we usually get involved, so, it’s not unusual for us to have somebody with 3-4-5 rental properties. You know, and they’re trying to just figure out who’s going to get what, you know—
Adrienne: And what would be fair.
Bill: Yeah, what would be fair and, and, as you know, uh, you’ve got to take the tax consideration and you’ve got something that’s been depreciated fully, you know, when that puppy gets sold you’ve got depreciation recapture, it’s a whole lot different than just straight capital gains. So, you need to take all those things in consideration when you’re deciding who’s going to get what.
Adrienne: So, so you guys will typically get involved when there’s multiple assets and uh, like life insurance policies and—
Bill: Yeah, all, all that stuff. Actually, it’s uh, yeah, the, the certified divorce financial analyst really is, has the most value if you will, when there has, when there’s a lot on the table and it’s very complex. I mean, just take a pension for instance, you know, somebody has a pension they’re going to get $5,000 a month, you know, starting 10 years from now, what is the present value of that? You know, because that’s a marital asset if, if it was earned during the marriage and you know, it’s a 50/50 deal, maybe you can’t even split it! You know, it could be that the, you, you can’t be an alternate payee. Which just means that there’s a divorce, that pension plan is going to pay you separately and if you look at some f the plans, that doesn’t happen, so that means that the other spouse is going to get the money and you have to count on them giving you your share. You know, every month. Well, you can imagine how that causes problems.
Attilio: Well, we know, unfortunately, statistically, that half of our listener base is uh, has a high probability of either they had a divorce or going to go through one. And I’ve even seen the statistics where it’s even higher, nobody really knows but I think conservatively, it’s at least half of the society. That listeners listening right now, either going into it, thinking about it or uh, you know, uh, what does it look like, they give you a call, describe to us how, uh, how does that first initial consultation look like?
Bill: Well, what we try do is, and by the way, I, it’s a relatively small part of my practice, you know, most of it is, as a financial planner, I kind of envision myself as you know, here I come to save the day (singing) and uh, so we, I, I would love to meet with a couple before, either separately or together, before they engage uh, an attorney, you know, not, not because I don’t like the attorney or anything, but if they can come to some sort of an agreement on how they’re going to handle the financial aspects of things, uh, it really does uh, you know, cut down on, on the costs. So, uh, the first—
Attilio: Legal costs.
Bill: Yeah, it’s the legal costs and so the first interview is always complimentary, I don’t charge you anything for that. I want to see if I can be of value, you know, if I can then great, and it’s just like from your profession, very often what we look for is you know, okay, we’re going to do a buy-out, you know, somebody’s going to buy somebody, well how much do you, how do you value that, you know, do you go get an appraisal or can you talk to a, a, a good real estate person who can give you a pretty good idea of what that, that value might be.
Attilio: Well here’s a, here’s a little tip that just came to my mind. To share with our listeners. Please, please, do not rely on a Zestimate.
Adrienne: (laughing)
Bill: Yes.
Attilio: There’s a 5% error rate for one—
Adrienne: Or more, depending on the location.
Attilio: Or more, and Zillow and this is factual, you can look it up online, is actually, is uh, facing a lawsuit from a homeowner, I don’t know, I think it was, maybe it was in New Jersey but anyway, the Chicago area, saying that the, the Zestimate, her list price, the space between her list, the difference between her list price and the Zestimate was almost $50,000-$60,000!
Adrienne: And it was causing issues.
Attilio: And it was, and she felt that it was causing perception, a value perception in a lower direction regarding marketing her home, so she’s actually suing Zillow for that, so Zillow is a good starting point, it’s uh, maybe a good anecdotal, just to give you an idea, but we highly recommend—
Adrienne: Verify it.
Attilio: Verify it, either get an appraisal, or talk to an agent who knows what they’re doing, maybe do both! And uh, to, to determine that value, so that’s on the real estate side.
Adrienne: And, and we actually uh, we get those requests pretty frequently and we’re, we’re happy to send out uh, a CMA.
Attilio: Free! Doesn’t cost anything.
Adrienne: Yeah! No worries.
Bill: Oh, that’s great, you, you, you mention something, at a starting point. And what uh, what a lot of people don’t realize is Hawaii does have a starting point for uh, divorce procedure and, and there’s, they, they consider it something called a partnership model. And it, it’s no longer fault divorce, I mean, you know, the old—
Attilio: Can you tell us the difference?
Bill: Well, in the old days, you had to actually, somebody had to be the bad person. You know, something, there had to be a, an irreconcilable difference you know, or you know, he abused me or she abused me, or something. There had to be fault. Now, if one person just says, you know, I don’t want to be married anymore, well, you can, you can file for divorce and you actually force the issue. But there is a starting place and what they do is they say, well, without getting into all the categories, did you have anything when you got married? And what was the value of that? Did you have anything gifted or inherited while you were married? You know, and what was the value of that? Because those things are considered separate and they, when you do your balance sheet, they kind of fall on one side or the other of the equation. Anything else acquired during the marriage is considered a category 5 or a marital asset. And it’s, it’s a 50/50 split. So, that’s, that’s that part and so often in any kind of a partnership, you find maybe there’s, the, the person who is uh, what do they call that, the person goes out and gets the business, the uh—
Attilio: Maybe the income earner or?
Bill: Yeah, the income earner—
Attilio: Breadwinner.
Bill: Something like that, and then there’s, and then there’s, for the person who does all the back-office type, well in a marital situation, it’s sort of like the traditional one, the husband went out and did all that and the wife worked, you know, didn’t, didn’t have her career. She stayed home, got the, you know, raised the kids—
Attilio: The children, more important job!
Bill: Yeah, and you know, when it comes time to split, all of a sudden, the, you know, very often it’s the guy saying well wait a minute, you know, uh, I, I, I did all this to make the money, how come she gets half of it? Or the other way, it could be the other way around, too. Uh, so there is a starting point and you can, you can actually detail all that out, but, you know, why do you want to split everything 50/50? Well it, we’ve got rental units, what are we going to do? You know, split everybody up 50/50 or is it better to say, well, you take this, you take that, and you try to, you try to negotiate. So just—
Attilio: It’s the taking assets and reallocating assets, as opposed to just splitting the actual property in half? Because it may not be advantageous for them to sell at that point. And I mean, other options could be if it’s amiable to just title the property into some kind of trust that they are both executors on or put them on the title and then that way it’s, it’s uh, you know, it’s not a marital asset but now it’s a, what are they, like partnerships in the ownership of a, a piece of real estate?
Bill: Tenants in common or whatever. Yeah, same type of thing. Sure, uh, there’s all kinds of diffident ways to cut the cake you know, and that’s the, that’s the point is that you, you have, you have this model but then you have this thing called a VARC which is a valid and reasonable consideration for deviating from the partnership model. Just a quick uh, a quick story, I had one where it was an almost 30-year marriage, the male in this case found a new spiritual partner, uh, and decided that uh, the marriage should be split and so he wanted to do 50/50. Well, it turned out that he was in irrevocable beneficiary on the mom’s estate. And had for the whole time of the marriage, told the wife, we don’t have to worry about saving for retirement, because we can rely on the fact that I’m going to have all this money because Mom’s eventually going to pass away and I’m going to get it. Well, now we’re very close to that happening, it was only like a year and a half or two years away with everything, and now he decides he wants to get, and he wants half of everything, well we were able to go in and argue the, you know, to, from the model, she ended up getting 90% of what was on the table as martial asset. He got 10, it sounds unfair sort of, except that you know, a year and a half later—
Adrienne: He got the trust.
Bill: He got the trust and there were millions of dollars and he ended up much better than she did. But there’s, there’s a variance, you know, so there’s, there are good reasons to vary from uh, from the model itself.
Attilio: You, you were looking at the big picture and, and long term.
Bill: Totally.
Attilio: What the results were going to be.
Bill: Yeah, the other thing is, is very interesting software out there is called family law software is the one I use, and what you do is you talk about financial planning uh, you’re trying to take one household to split it into two, so now what you do is you put all the financial information on one side, you put all the other financial information on the other side, and then you run charts and graphs and say well, if, if this income goes and this asset’s there and this is passive, you know, here’s where this person’s going to run 10 years from now. Here’s where the other person’s going to run 10 years from now, and so now you can start adjusting assets and cash flow to try to even things out, and, and its a, it’s, it’s great stuff, actually.
Attilio: Yeah, and then on top of all of that it’s just whether or not the uh, the partnership or the, or the individuals on each side are amiable, right? And then you have that whole emotional context and that’s overlapping and confusing and, can become argumentative and expensive with attorneys.
Bill: Right. Right.
Adrienne: So, so do you do a lot of work with the local attorneys here like, they call you to consult?
Bill: Yes, uh, I thought I was going to do it a lot more, and uh, the reality is, I normally don’t get called in by a law firm unless it’s the 11th hour uh, you know, where, where we’re about ready to go into trial and I need somebody to come in and, and do something.
Attilio: So, you’re validating, coming in like an expert witness, for just validating how everything’s being split up and it is equitable for both sides?
Bill: Right, yeah.
Adrienne: But it sounds like it would be better for them to be calling you—
Attilio: Before they go—
Adrienne: To help to consult and you know, just confirm or advise, you know, especially with, there’s a lot of assets involved.
Bill: Right. Right. Uh, exactly and you try to get the couple to the point where they’ve come to some reasonable agreement on the things and you’ve got to be careful because then if you’re, not to saying, anything, nothing disparaging about other professions, but if you’ve got people who are working by the hour, you know, maybe they’re trying to get—
Adrienne: Prolong.
Bill: Get more hours. Yes.
Attilio: Well, there’s no, there’s; no incentive to bringing it to a conclusion. There’s no financial incentive to bring it to a conclusion, in fact, there’s, it goes in the opposite direction.
Bill: Unfortunately, yes.
Attilio: Because that’s the way that business model works. They’re supposed to be acting in your best interest, but obviously, they earn a better living the longer the adversity continues.
Bill: Yes, and there’s, there’s plenty of people out there that are ethical, they don’t do that, and just like any profession, there are, you know, things on the other side where, wait, you know? You don’t want to maybe agree to that because I, you know, I think we can get you more on this. You know, so, cha-ching!
Adrienne: So really like the first step should be to meet with someone like yourself or with you, to help get all that ironed out ad then, then you meet with the attorney.
Bill: Well that’s my very biased opinion, uh, and by the way, we don’t do anything with child support, you know, custody cases and stuff, it’s purely—
Attilio: Asset.
Bill: Looking at it from the, yeah, just the assets.
Adrienne: The financial.
Attilio: Well, you made a good point there, you know, you’re getting paid by the hour, the longer it takes, I wish when we have unreasonable sellers, whose homes stay on the market forever, that we could switch to that model and get paid by the hour. Uh, because uh, unfortunately we only get paid one way. When we close the transaction and we don’t get one dime before then. So, uh, anyways, speaking of that, uh, you know what’s uh, we’re going to take a break, but I want to, people are probably wanting to get ahold of you and give you a call as they hear this. What’s a good number to reach you at?
Bill: Uh, best number is 261-5556 and uh, we have a very cleverly named website, www.mcrobertsandassociates.com. So, if you can’t remember the number, if you just remember my last name and put “and associates” you’ll be able to find us.
Attilio: And associates, a-n-d?
Bill: Yup, a-n-d, no ampersand, just.
Attilio: Www.mcrobertsandassociates.com!
Bill: That’s it!
Attilio: Okay, we’re going to take a break?
Adrienne: Yup, we’re going to take a short break, but stay with us, we’ve got more questions for—
Attilio: Yeah!
[Music fades to commercials]
Announcer: It’s the Team Lally real estate show. Here’s Adrienne and Atilio!
Adrienne: Welcome back and thanks for listening to the Team Lally real estate show, home of the guaranteed sold program or we’ll buy it. I’m Adrienne—
Attilio: And I’m Attilio!
Adrienne: And if you have any questions, just give us a call at 799-9596 or check us out on the web at www.teamlally.com.
Attilio: Hey, so, welcome back, we’re talking with the uh, investment advisor, Bill McRoberts and uh, we’re talking about real estate, well, no, we’re not talking about real estate transactions, well kind of about real estate transactions, but more importantly we’re talking about uh, certified divorce financial analysis. So, uh, kind of before the break, some highlights that we talked about is that the best time to get ahold of you if you’re thinking about going through that process is before or after the attorneys?
Bill: I would prefer before.
Attilio: Yeah.
Bill: For a number of different reasons but it, yeah.
Attilio: Give us the best reason.
Bill: Uh, I think it really helps to uh, mitigate costs, total costs because now you, yeah, if you can get all your ducks lined up, because there’s two sets of documents you’re going to have to do, anytime you get a divorce in Hawaii. There’s an income and expense statement and there’s an asset and debts statement. Ideally the asset and debts statement should be exactly the same for both parties. You just say this is the husband’s, this is the wife’s, but same numbers. You know, and now you get real estate, you know, how much are you going to put down for it. The income and expense statement, however, is sort, it’s not exactly a crap shoot, but it’s, there’s no clear guidelines on how to do it. We, and, and this is nationwide, like to do it as if you’re already divorced, what is your income and expense going to look like? You know, so now you’ve got, you know, how are you going to figure that out? And how do you put it down? You know, because uh, so, and, and it has to be done, you know, if you’re going to be doing that with 2 different attorneys doing the same thing and now you’re paying that cost twice, you know. Uh, that’s just a simple example of why, why it might be good to, to do the other uh, you were asking me before if there was any stories that might be of interest so uh, anyway, uh, one, one of the things that I do is uh, some informal business evaluations and I did have a case, and I’ll try to be careful not to say too much about it because you know, we, it might be able to figure out who it was, uh, I got a call from an attorney and he said can you help me out, we’ve got a business that uh, is, is obviously generating income because the people are driving nice cars and living in nice houses and stuff, yeah they ___ but the business is being valued at nothing.
Attilio: Uh-oh!
Bill: Well, there were 3 diffident businesses, and I won’t go into 2 of them, but the third one was a laundromat and what I will tell you is the other 2 businesses were also cash businesses. And, you know, so, the, the tax returns had turned up, their tax returns were being done by a relative and the other business advisor, uh, business analyst was using that tax return as the, the basis for his analysis and I, I can understand why he came up with 0. Because it looks like this thing isn’t making any money and the people didn’t want to pay the $20,000 for a full-on business, they just wanted a quick and dirty, you know, based on this, well, one of the things I like to do any time there’s a business involved is try to find out if there’s a, a reasonable, a willing buyer, willing seller relationship that I can find. And what I found was in the laundromat business, that very often people buy and sell not based on a tax return or that, what they do is they look at the utility bills and because of the utility, they can tell how many turns they’re getting for all those coin-operated guys.
Attilio: Yeah, how many loads of laundry and how many dryer spins.
Bill: Right exactly.
Attilio: On the utilities.
Bill: So, uh, anyway, basically I just uh, I was able to get somebody to put a bid on, informal, ___ and said well, if your client ends up with this laundromat, you know, we’ll be willing to buy it, you know, from you for this much money as opposed to it’s only worth nothing. See, this I the other thing you can do, is somebody’s low, oh, the other one—
Adrienne: Someone’s willing to put in an offer.
Bill: This was a real estate one, okay. There was a, a house on Maui that was being used for business purposes and it was a residential property.
Attilio: Like vacation rental or?
Bill: Well, no, it got zoned for business so it was, it, it got rezoned so it was one of those things where you’ve got a house with a business right? So, anyway, the uh, the appraisal came in at, at a certain number and if I, I looked at the appraisal and then I noticed they were asking for it to be re-appraised, and I was going why would you re-appraise this thing? Turned out they were appraising it as a residential property, not as commercial property, you know, and now we’ve got a real can of worms because the people that are doing the appraisal knew that, but they were doing it the other way, and the attorneys got greedy, and so at the end, so it was our process, we said, okay, fine! Well, we’ll accept hat low appraisal, we’re going to keep it on our client’s side of the ledger. Well guess what happened you know? All of a sudden, the price went up, you know, so the price went up so, it, just strange things that happen.
Attilio: Well, you know, one of the things when we sit down with clients is, is we, we go through the process of explaining to them, you know, what, how do, how is a value determined on, when a piece of real estate sells and the bottom line, and we take them through this whole explanation, 5 different things, factors that we take a look at, but at the end, in one sentence, the value of something is what something’s willing to pay for it. So, you found a ready, willing and able buyer for the laundromat?
Bill: Right.
Attilio: And if, if, regardless of appraisals or anybody’s opinion or what side of the divorce they’re on, if this buyer’s willing to pay $X then that’s the value of that asset!
Bill: Yup, especially if uh, if the person says well, I’ll tell you what, I’ll take it because I know I can turn it around and sell it.
Attilio: Sure.
Bill: So, now, yeah, absolutely take it.
Attilio: That’s a lot better evaluation than 0!
Bill: Yes.
Attilio: Is having somebody come in with a bona fide offer.
Bill: Yeah, we, we actually, I can throw this number out I guess, uh, we ended up with a $600,000 value of the, for the businesses as opposed to 0, so that did.
Attilio: Yeah, that’s a big difference!
Bill: That was—
Adrienne: Worth it.
Bill: Yeah, a little bit there for, you know.
Attilio: So, there might be uh, if you’re thinking about going in this direction, you know, part of your assets for a couple of businesses, maybe it’s hard to determine value because they’re all cash and somebody’s saying this. It might be, there might be 600,000 reasons why you want to give Bill a call.
All: (laughing)
Attilio: At 261-5556, again that number’s 261-5556. You have any more question for?
Adrienne: Oh, I also was going to say too, check them out online as well, at www.mcrobertsandassociates.com.
Attilio: Very good, you can read my handwriting!
Adrienne: I can.
Attilio: My chicken scratch.
Adrienne: Now, uh, now Bill, before we uh, we end our show here, is there anything more that you want to share with our listeners about financial planning, the divorce planning, business evaluations, I know we covered a lot, but any final parting words for our listeners?
Attilio: Yeah, words of wisdom.
Bill: Well, just, if uh, if you find yourself in the throes of that uncomfortable situation called divorce and there are significant assets involved, it might be worth your while to uh, talk to a financial professional, you know, before engaging the legal professional, that’s just my uh, my rather biased opinion.
Adrienne: So, so get them involved early and, and keep them involved, too.
Bill: Oh absolutely, yeah.
Adrienne: Right, so stay involved through, until the divorce is completed.
Bill: Yeah. Exactly.
Attilio: Now, another option you could go is just go get some counseling and just stay together.
Bill: Uh, there is—
Attilio: There’s that whacky option also, too! That people might not be thinking about is uh, you know, marriage is work so. Anyhow! Uh, we’re going to take a break or, or are we getting close to the end of the show?
Adrienne: No, we’re going to be uh—
Attilio: The break is the end of the show?
Adrienne: Yes, but we’ve got, we’ve got Brooks on the line—
Attilio: Oh, Brooks!
Adrienne: To give us uh—
Brooks: Hey guys!
Attilio: Hey, Brooks!
Adrienne: To give us a tip or, what have you got for us?
Brooks: Okay, so I have a question, that, 20 million people on the planet love squash. And I’m not talking about the vegetable, this is the sport squash.
Attilio: You’re not talking about the sound a mosquito makes when it hits your windshield?
Brooks: (laughing) No, I’m not talking about that either.
Attilio: It’s the game.
Brooks: That’s a good one, Atilio. And so, this listing that is coming soon is located in ___ Valley, unbelievably, I mean it’s a majestic property, spectacular views, just awesome and it has its own standalone uh, certified, league-approved squash court. Self-contained you know, just, there’s, they’re buying a new air conditioning unit to the tune of $36,000 for this uh, squash court here uh, this week. We’re doing some tune-ups at the home and we’ll be ready to go in the early part of August, so uh, this is a phenomenal property.
Attilio: Yeah, and—
Adrienne: How, how big is the property, Brooks?
Brooks: Uh, gosh it’s 5, well in terms of uh, square footage it’s like 5,000+ square feet, and then it’s got 3 massive den rooms and 5 bathrooms and then the squash court on a giant like over acre land and it’s just right, it’s, it borders the golf course, it’s unreal. It’s great.
Adrienne: It’s got to have some amazing views out there.
Brooks: It’s unreal, just, it looks like you can reach out and touch the ocean.
Attilio: Yeah, I was thinking too, let’s say, hey, maybe you’re not into squash, this would make an awesome dodgeball court!
All: (laughing)
Attilio: Off the wall dodgeball!
Brooks: Yes, or any other, you know, mayhem type of activity that you can think of Attilio. Uh, you know, it would be perfect for.
Attilio: But uh, squash, and we never, we started looking it up online. There’s a lot of people, they have a whole uh, I looked it up, there was a whole U.S. Open and it was pretty cool because the, all the walls are clear, so they actually have the, the, the spectators sit like 360 degrees around this one court, like a big cube right in the middle and I, and I watched some live stuff, I was like that’s pretty neat!
Brooks: Yeah, that’s, that venue is very spectacular, just for full disclosure, this has the backside of the back wall is clear, for audiences to sit and there’s plenty, plenty room for an audience and matter of fact they had an international tournament there last year. And, yeah! It was really, really spectacular!
Adrienne: Wow! I think, I, I think we should have a team meeting out there and play squash.
Attilio: Do a little squash tournament.
Adrienne: Yes.
Brooks: You know what?
Attilio: To get to know the property.
Brooks: I can make that happen.
Adrienne: That would be fun! Let’s do it!
Brooks: Alright, sounds good. You guys have a great day!
Adrienne: Thanks, Brooks!
Attilio: So, that’s uh, coming soon property, it’s out in the gated community, ___ Estates out there in ___, uh, you’d be surprised what kind of interesting properties, interesting people that live out there.
Adrienne: It’s a, a gated community, beautiful views.
Attilio: And for you Hawaiians out there, they even have their own ___.
Adrienne: They do!
Attilio: Inside this gated community, you can take a look, and it’s being preserved by the state of Hawaii.
Adrienne: Alright, so we’ve got a couple more seconds.
Attilio: And we’re bringing it to an end!
Adrienne: Bring it to a close, so thank you for listening and thank you to our sponsors!
Attilio: Jodie Tanga and Derek Tanga of Pacific Rim Mortgage!
Adrienne: Bradley Maruyama of Allstate Insurance!
Attilio: Nathan Baker of Pillar to Post Home Inspections!
Adrienne: Ben and Tony Mamood of AAA Roofers Hawaii!
Attilio: Janyce Myrland with Dream House Drafting!
Adrienne: John Speed of Kilauea Pest Control!
Attilio: Duke Kimhan with Hawaii Pacific Property Management!
Adrienne: Mike Metts of Kama’aina Plumbing!
Attilio: Thomas Pattison with Pattison Land Surveying!
Adrienne: Myron Kamihara of Kamihara Law!
Attilio: If you want to get ahold of any of our sponsors, just go to www.teamlally.com!
Adrienne: We also want to give a big thank you to Lea, our producer here in the studio!
Attilio: And Bill, our studio guest, chi-hoo!
Adrienne: Make sure to tune in next week, we’ll have one of our awesome guests talking about something that’ll change your life—
Attilio: Forever! This is the Team Lally real estate show, home of the guaranteed—
Adrienne and Attilio: SOLD PROGRAM!
Adrienne: If we can’t sell your home at the agreed-upon price and our time frame, we’ll have it bought for cash.
Adrienne, Attilio, and Bill: THANKS, AND ALOHA!