Questions & Answers

Editor’s Note: This article first appeared in the March 1975 issue of the R.E. News Observer.

1. Question: Many people have called you the father of modern real estate exchanging. When did you really see a need for this field to become a specialty?

Answer: It was in the latter part of the 1940s that I could see the need to become a spec¬ialist in the “people business” to succeed in property, and profes¬sionally conduct an exchange and counseling business.

2. Question: Did you have any idea the field or specialty would grow as fast as it has?

Answer: Yes, I thought this specialty would grow fast and, even though you refer to it as growing fast, there’s still a very small percentage of licensees in the U.S. who are competent, well trained exchangors and coun¬selors.

3. Question: You probably have been the most misquoted man in real estate. Some people claim you have encouraged peo¬ple to work in “cats and dogs” real estate. For the record, where should the newcomer to this specialty look for potential trans¬actions without having to work with tough properties?

Answer: You are right, I have been misquoted many times. The misunderstanding I think, arises in the misconception of what a “don’t wanter” is. I have said that everyone who wants to list or does list a property for sale or exchange, is a “don’t wanter.” Then through counseling the mental concept of the “don’t wanter” is developed to get the real reason why the client wants to make a move. Occasionally, some clients do have some “cats and dogs,” but that’s not the broker’s fault when he finds it necessary to use whatever peo¬ple have, to get them better benefits. One place a new comer can look for potential transactions is to check the commercial and in¬dustrial properties that have been owned for over seven years. The reason for this is that in all probability, the goodies of de¬preciation have been used up and these owners might wish to make a move for better benefits.

4. Question: The newcomer to investment real estate and real estate exchanging is faced with extreme pressures – a tough money market, some unrealistic state, federal, and environmental laws, a challenge by I.R.S. What can you tell this new person on how to “make it” in his first couple of years?

Answer: This is a hard question to answer particularly right now (as a general statement) because “making it” in the first couple of years would depend on the situ¬ation of the licensee. Whether he can subsidize himself for awhile, and so, I think the answer to this question has to be made on a personalized basis. One thing, of course, a new person in this busi¬ness should do is to attend as many organized exchange meet¬ings as possible.

5. Question: The entire coun¬try, for the past six months, has been very negative toward all fields of investments. What is positive about the next twelve to twenty-four months?

Answer: For the first time in 25 years, I think I cannot answer this question. Some economists are of the opinion that real estate in general will have prices dropping later in 1975 and then increased beyond all expectations in 1976. But who can make such predic¬tions with our disorganized econ¬omy or 1974 “affluent recession” and so, the only answer it would seem is to plan day by day and change with the changes.

6. Question: As the founder of the national Society of Exchange Counselors, what are the mem-bers doing to increase business in a rather bleak cycle?

Answer: Using all formulas and creative techniques possible. This group fortunately knows more creative ideas than any other national group, and the members have a better chance of survival in today’s mar¬ket. Because of not only being creative, they know how to ex¬change and there has been no better time in a long time than now for exchanging.

7. Question: The S.E.C. members have been very aggressive in forming exchange groups and marketing groups throughout the United States. Have these groups been a success?

Answer: In general the groups that have been most successful in forming and continuing meet-ings, have been those formed as a result of teach¬ings of the Reno Educational Foundation. This is because the graduates of our seminars have a common bond of knowledge and speak a common language.

8. Question: If I can turn back to the economy again. Many in¬vestors have become disenchant¬ed with the stock market; some of the bond market has been soft and real estate financing has been un¬realistic. The Irving Trust Bank and Chase have created capital by plugging their investments to the prime rates. How is that go¬ing to affect real estate, Savings and Loans and the rest of the banking industry over the next two years?

Answer: There’s no way to answer this question because the conditions you mention in your question are changing almost daily. With the confusing situa¬tion of international banking and the havoc the overseas money is doing to international affairs, the effects are unknown at this mo-ment. In my opinion that effect is going to be on everyone and everybody. It would appear that everyone is getting hurt, one way or another by our crazy economic system that is going around in circles. One thing seems certain and that is the more our Con¬gress tries to legislate economics
the worse off we will be.

9. Question: The savings and loan industry is securing approval of high yield time plan deposits in order to compete with the banks. If the deposits yield high amounts, what is this going to do to investment realty with pro¬posed “limitation of artificial loss” rules?

Answer: So far, there has been no change in the laws regarding LAL. It is only in some cases I.R.S. auditors attempt to audit on the LAL basis, but without the law to back them up.

10. Question: Some investors want high yield corporate bonds, others want high yield treasury notes and bills. What position will they be in if the dollar is again devalued?

Answer: I feel that I’m not familiar enough with the entire worldwide banking confusion to answer that question.

11. Question: Recently when the government issued a large block of high yield treasury notes which could be purchased for amounts as low as $1,000, did the popular acceptance of these notes create any ideas on how real estate licensees might cap¬italize on this fact?

Answer: Certainly, such notes and bonds can be used as col¬lateral and paper could be created against them to acquire real estate.

12. Question: Considering to¬day’s economy, what kind of ve¬hicles are you acquiring for your own account and for your pen¬sion and profit sharing trust?

Answer: Productive land (agri¬cultural) and treasury bills.

13. Question: The high infla¬tion has certainly had its effect on real estate. However, those hurt even more by inflation have been the senior citizens and those approaching retirement. How can those in the “problem solving” specialty help this group?

Answer: By using whatever these people have as a spring¬board to get them buyer bene¬fits. We all have learned that per¬sonal and real property can both be used to accomplish this.

14. Question: Going back to the new person entering real estate, what do you see as the major opportunity for this indi¬vidual in the near future?

Answer: Same as before – specialize. In California, people are going to real estate schools to get licenses as though a real estate license is going out of style. Obviously, the industry can¬not absorb all of those very eager people. There will not be enough to go around for all getting lic¬enses.
15. Question: Rumors say Rich¬ard Reno is cutting back on a busy schedule, not going to teach too much and pull back on the heavy work load? What are Rich¬ard Reno’s plans.

Answer: There is some truth to this rumor. However, I am not retiring, I have not stopped teach-ing, I have just cut down. For example, the next seminar I will teach in San Diego the last week in February, 1975 and plans are now tentatively set to teach only one other seminar personally in 1975, and that in October in the International Hotel at the Los An¬geles Airport.

16. Question: We would like to thank you for spending these moments with us and could we ask if you have any further com¬ments to our readers.

Answer: Yes, if a real estate licensee finds that his business has been hit so hard as to greatly disturb his income, suggest he stay in business, but “Moon¬light.” In times of crises like the ’30s ’40s (and like now), people’s ideas change, people’s wants change, and people’s needs change. There are many new and different opportunities arising in keeping with the times of change. Therefore, one should be alert to the new opportunities caused by unfortunate events of the
econ¬omy. I am naturally optimistic, but facing the real world can see no way that the present condi¬tions can correct themselves in the short space of 1975. It took a long time to get everybody in a mess including the government. Wheels don’t turn fast enough in my opinion, to correct today’s bad trends only over the long haul which might be a matter of five years or more. Take the de¬pression of the 30s, it took ap¬proximately 10 years to pull out of the gloom and doom. The one big difference between that de¬pression and the years of the 40s is that neither of those periods were militant to the extent that they are today. In those times there was more empathy and more people helping people. Now there’s too much of the at¬titude of fear and greed and extra permissiveness.

In the 1950s, Richard Reno, founder of the Society of Exchange Counselors, observed that if people exchanged real estate it could solve many of the real estate circumstances existing in San Diego’s overbuilt market. He saw exchanging as an alternative to the unavailable cash buyer. He believed that people who owned real estate did not necessarily want to totally divest themselves of real estate ownership, but were uncomfortable in the circumstances surrounding their current ownership. In effect, the problem was not with the property, but with the people who owned it. In his opinion, there was no bad real estate, only inappropriate or untimely ownership. This premise led Mr. Reno to an idea that resulted in the modern real estate exchange (equity marketing) business we enjoy today.

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