What We Can Learn From The Office

Thinking Small Can Make You Rich
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Say you're a small, semi-obscure paper-supply firm, under siege from the big boys: Staples, Office Depot-ever-expanding behemoths with bargaining power you can't match and Web-based customer interfaces you can't beat. Short of cashing out and going home, do you do? If you're Dunder Mifflin, you take a deep breath, throw open your doors, and invite the cameras in. You identify your most floundering, dysfunctional branch and offer it up to NBC to use as the subject of a warts-and-all documentary series.

To some, this might seem an act of corporate seppuku. Who wants their seemingly inevitable decline immortalized on tape? Generally, the market for Wall Street snuff films doesn't kick in until after a firm's Enron-like implosion. But since the documentary began filming, most of the employees at the camera-infested Scranton, Pennsylvania, branch have embraced radical transparency. After all, openness builds consumer trust, which will move any product-even dead trees. Why? Because "business is always personal," in the words of Michael Scott, regional manager at the Scranton office. "It's the most personal thing in the world."

Personal, maybe. Private? Hardly. So far, the cameras have captured everything, including Scott's gaping, baby-bird screeches for validation (yes, ladies, he's single!) and the high-wire romantic tension between assistant regional manager Jim Halpert and receptionist Pam Beesly. From cubicular microdramas (will adjutant, humorless sales agent Dwight Schrute ever learn to anticipate Halpert's daily pranks?) to ticking time bombs (who'll crack first, alcoholic Meredith or evangelical Angela?), the Scranton branch is a teeming reef of pungent humanity - individuals you can't help but care about, even at their pettiest and most paranoid.

But will transparency rescue a moribund business? Turns out, it already has - across the pond, at least. In 2001, a BBC film crew began following the worker bees of a midsize paper supplier based outside of London. When the documentary aired as a weekly series in the UK, the company's paper sales skyrocketed. "Office managers with purchasing power empathized with the employees' hopes and fears and errors and dreams and errors," explains Jan Levinson, Scott's supervisor and director of Dunder's mid-Atlantic operations, who helped bring the concept stateside. "Um, did I say errors twice?"

No one understands - and embodies - Dunder's blunders more than the hapless Scott. His tactless, childish management "style" is often inappropriate and occasionally illegal. Will Americans embrace a guy so eager to please that he authorizes the hiring of a stripper for an in-office bachelor party? "Yes, because I showed I learned something," Scott explains. "I learned that letting a stripper sit on your lap is wrong, especially if you have a girlfriend - who's also your boss. My boss. Jan Levinson... My boss with benefits." He winks. "Sex benefits? I also learned that honesty is not such a lonely word, as I think Billy Joel said, but is, in fact, the best policy... which I think Shakespeare said. Or Jesus."

You're right, Michael: Honesty may be the best - and only - policy these days for Dunder Mifflin, an embattled underdog that can't help but be itself. The Scranton team maintains a boutique regional clientele on the strength of their sweaty-palmed, oddball intimacy - at once their biggest liability and best asset. "David will always beat Goliath," Scott recently thundered to a business school class. After being reminded that Dunder faces not one but five huge competitors, he replied, "You know what else is facing five Goliaths? America: al Qaeda, global warming, sex predators, mercury poisoning." He paused, appearing to lose count, then rallied: "So do we just give up?"

Give up? No. Fess up? Yes. Because in this new era of radical trans parency, the way you sell paper is by showing the world that you're not above getting reamed. "That's what she said!" laughs Scott. "That's a sex joke. But not about my boss... with benefits. You know what?" He looks into the camera. "Can we do that part over again?"

[via wired.com]

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Does 'Toyota Way' Really Work Outside Japan?

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It's not a diet, it's a lifestyle - make the change.

By MARTIN FACKLER

TOYOTA CITY, Japan — It does not occupy much space on the office wall, but Latondra Newton calls it the hardest thing for Toyota’s new American employees to accept: those colored bar charts against a white bulletin board, in plain view for all to see.

No, they are not representing the company’s progress toward goals. Rather, they are the work targets of individual workers, visibly charting their successes or failures to meet those targets.

This is part of the Toyota Way. The idea is not to humiliate, but to alert co-workers and enlist their help in finding solutions. It took a while for Ms. Newton, a general manager at Toyota’s North American manufacturing subsidiary, to take this fully to heart. But now she is a convert.

“For Americans and anyone, it can be a shock to the system to be actually expected to make problems visible,” said Ms. Newton, a 38-year-old Indiana native who joined Toyota after college 15 years ago and now works at the North American headquarters in Erlanger, Ky. “Other corporate environments tend to hide problems from bosses.”

Toyota’s corporate culture has transformed it from a small manufacturer into a market-gobbling giant famous for quality circles and giving workers control over production lines. For years, aspiring factory leaders have come here to attend Toyota’s select technical high school, the Toyota Technical Skills Academy in Toyota City.

But Toyota — on course to become the world’s largest automaker — needs to sharpen its game to meet even larger challenges, including raising quality in the face of rapid overseas expansion and its largest recalls in history.

The nerve center for that task is a nondescript cluster of buildings in the lakeside town of Mikkabi, an hour away from the humble-looking headquarters of Toyota, in Toyota City.

It is the Toyota Institute, charged with preparing executives to enter the leadership class at Toyota by inculcating in them some of the most prized management secrets in corporate Japan. The institute sends off its executives to offices around the world as missionaries of sorts for the Toyota Way. The institute does not quite aspire to be Japan’s answer to General Electric’s famed Crotonville training center in Ossining, N.Y., which spawned a generation of top executives across American industry. But it is Toyota’s best effort to avoid corporate short-sightedness and to keep the company true to its original mission of winning customers with quality cars, even as it comes under intensifying scrutiny.

“There is a sense of danger,” said Koki Konishi, a Toyota general manager who heads the institute. “We must prevent the Toyota Way from getting more and more diluted as Toyota grows overseas.”

It used to be enough for the culture to be transmitted by word of mouth among Toyota’s Japanese employees, on factory floors and around cafeteria tables. But Toyota outgrew these informal teaching methods and created the institute, which is so secretive the company would not allow a reporter to visit it, let alone sit in on any classes. Mr. Konishi said Toyota was building similar centers in the United States, in Kentucky, and in Thailand.

“Before, when everyone was Japanese, we didn’t have to make these things explicit,” Mr. Konishi said. “Now we have to set the Toyota Way down on paper and teach it.”

“Mutual ownership of problems,” is one slogan. Other tenets include “genchi genbutsu,” or solving problems at the source instead of behind desks, and the “kaizen mind,” an unending sense of crisis behind the company’s constant drive to improve.

The whole company prizes visibility. To nurture a sense of shared purpose, Toyota has open offices — often without even cubicle partitions between desks.

Dissemination of the Toyota Way overseas, however, can be spotty, executives and analysts warn. Toyota prides itself on pampering customers, but analysts are reporting weak or uneven service at Toyota sales subsidiaries, particularly in emerging markets like China and India.

Worse, some executives like Mr. Konishi complain of managers at Toyota factories who have not adhered to some of the company’s most basic creeds, like allowing workers to stop factory lines when they spot defects. Empowering factory workers has long been central to Toyota’s quality control.

And analysts say Toyota’s recent and embarrassing surge in vehicle recalls was partly a failure by Toyota to spread its obsession for craftsmanship among its growing ranks of overseas factory workers and managers.

“If Toyota can’t infuse its philosophy into its workers, these quality problems will keep happening,” said Hirofumi Yokoi, a former Toyota accountant who is now an auto analyst at CSM Worldwide in Tokyo. “The institute was founded because Toyota is afraid of growing too fast and losing control. It’s still too early to know if it will work.”

For Toyota’s 26 board members — all Japanese salarymen raised on the founder’s ways and with an average age of 62 — the adjustment to its recent emergence as a global leader will not be easy. It was not until 2001 that the company first set the Toyota Way down in writing, at the orders of Fujio Cho, the president at the time who helped orchestrate Toyota’s rapid overseas growth. The company established the institute a year later.

In the last decade, as Toyota has expanded into a vast international group, it has often exported its manufacturing and management methods to 200,000 workers at 27 plants overseas without always taking the time to explain the ideas behind them, analysts and executives say.

So now, with only a third of its total workers employed at its 18 plants in Japan, much of Toyota’s sprawling global empire does not always march to the same tune, these executives and analysts warn.

“Toyota is growing more quickly than the company’s ability to transplant its culture to foreign markets,” said Takaki Nakanishi, an auto analyst at JPMorgan Securities in Tokyo. “This is a huge issue for Toyota, one of the biggest it will face in coming years.”

Ms. Newton, a general manager in charge of training and employee development in North America, can testify to that. She said that while new American hires often had difficulty at first with some tenets of the Toyota Way, they quickly caught on.

Ms. Newton includes herself in that group. At first, she confessed, she did not embrace some of these practices, especially the white bulletin board, which she said she overlooked at first as “wallpaper” because she did not look at it closely. But Ms. Newton said the institute — which has already trained about 700 foreign executives — changed her. There, she says, Toyota tackles the problem of cultural education with the same intensity that it applies to building drive trains and transmissions.

After arriving at Mikkabi last September, she and her 40 classmates from the United States, New Zealand, Singapore and Japan were immediately plunged into a week of 12- to 14-hour days, starting with lectures about the Toyota Way from the company’s president, Katsuaki Watanabe; Mr. Cho; and other Japanese executives. Each day was focused on a specific core concept, with students discussing the meanings in their own words.

Ms. Newton says the students often worked late into the night on group presentations summarizing the Toyota Way and how to apply it to actual problems back at their home offices. One tenet that she studied was “drive and dedication,” a practice of always seeking out problems and then solving them by breaking them into smaller, more manageable pieces. The class also discussed other slogans, like “effective consensus building” and “respect for people.”

After an additional week at the Wharton School of the University of Pennsylania, she spent five months in Kentucky on an independent project about teaching Toyota culture to generations that would enter the company around 2020. She says she flew to Japan in December to give a 10-minute presentation to Toyota’s president, Mr. Watanabe.

Toyota’s culture, she said, is still grounded in a Japanese-oriented brand of group-think. But in some cases, Toyota has also adapted it to fit American culture, she said, dropping group calisthenics at American factories, for example, although that is still common at Japanese plants.

She said she understood the Toyota Way better after learning from people who had lived it their entire professional lives. She now uses the wall chart as a critical motivating tool for managing her employees.

“When I saw folks in high ranks, like Mr. Watanabe, and how consistent and dedicated they were, I knew they were true believers” in the Toyota Way, Ms. Newton said. “Now, I’m a true believer, too.”

NYTimes.Com

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Do You Make These Mistakes With Your Web Site?

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While it's true that "nobody's perfect," I think the same goes for small business web sites as well - no web site is absolutely perfect. Even the best of the best often have room for improvement!

But there are some basic web site mistakes that many small companies make that can end up hurting business instead of helping it. Do any of these mistakes show up on your web site?

- Not enough content.

Often, small businesses will put minimal information along with their contact information on their web sites and think that's probably good enough. But today's web visitors are looking for something more, and lots of good quality content is a great way to deliver value to your visitors and build credibility for your business.

- Old or outdated content.

If you want visitors and search engines to pay attention to your web site, you need to keep adding new content and updating the existing information on your web site regularly. If your site never changes, the search engines will ignore your site, and visitors will not have a reason to come back. It's also unlikely that visitors will recommend your site to their friends and colleagues, too.

- Not being search engine friendly.

Speaking of search engines, what happens if a search engine spider visits your site, but can't read your web pages? Nothing happens, and that's a problem. If a search engine spider cannot read your web pages, it just moves on to the next site, and your information is completely ignored. Your web site must be search engine friendly in order to be included in the search engine databases.

- Not monitoring your site in the search engines.

Even if your web site is search engine friendly, there are constant changes going on with the search engines and also with your competitors. If you aren't monitoring how your site is performing in the search engines, how will you know if these changes are affecting your rankings or if you are losing traffic? Monitoring your web site means that you can react to changes and take appropriate steps to make sure your site shows up in the search results and that web traffic keeps flowing.

- The site is built using Frames or Flash.

Not too many web sites still make this mistake, but there are still some small business web sites out there using one or both of these methods. Sites built with Frames or Flash intro pages cannot easily be read by the search engines, and web visitors typically hate using them as well. These are older web techniques that don't reflect well on your business, they don't perform well in the search engines, and today's web visitors expect better.

Making your web site the best it can be is a very effective and affordable marketing option for most small businesses. Of all the other types of advertising and marketing that you do each year, your web site has the potential to be seen by more customers, can continue to promote your company perpetually through links, is always accessible to customers, and can instantly reflect changes and provide fresh information to draw people in.

Avoiding basic web site mistakes will help your site perform better, making it a "perfect" marketing strategy for your small business.

About the Author: Lauren Hobson is the Editor of Biz Talk Newsletter and the Five Sparrows Marketing Blog from Five Sparrows, LLC. Read the most recent Five Sparrows articles on small business websites and marketing or subscribe at www.fivesparrows.com/biztalk.

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Starting your own home based business

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One of the biggest growth areas in modern economies is the amazing growth rate of home businesses.

The event of the internet has made the ability to work at home not only possible, but downright advantageous. With a computer and a small home office the ability to generate income from home has brought lifestyle benefits to millions. Benefits such as spending time with children, flexible working hours, no traffic commute and no bosses to deal with are just the begining of home business perks. Many people have also discovered that starting a home business leaves their prior income level in the dust. Those who successful learn the home business lessons not only find an income, they can also find riches and the satisfication that comes from achieving financial freedom for their family.

This new wave of home businesses is particularly lead by women. Women who choose to stay at home and keep their children out of child care still have the desire to provide for their families, these are women who have grown up in the 80's and 90's in the post feminist era and domestic duties alone does not inspire them. Women realise that in western economies no family can get ahead on a single income. So despite the heavy demands of running a home many are using the few precious hours they get when their children are asleep or playing to get online and start businesses.

Some start up there own companies with product and inventories filling up spare attic and garage space. However many recognise the benefit of acting as agents and selling online without actually stocking any product.

There are a variety of ways to run a successful home business that will earn extra income for the family.

One way is to tap into the billions online. Probably the easiest way to do this is to create blogs and websites that utilize google adsense. The pay per click income can be anywhere from dollars to thousands per month depending on the number of visitors. Women seem to be especially good at creating sites that attract other women. Gone are the days where women could get together to chat over domestic duties (i.e. the old monday washing day, etc), so the modern women now communicates online. And there are plenty of online communities to chose from. More income can be realised by adding other google products and service offers as well. Likewise other major search engines like yahoo have similiar programs.

Another way to make money through a home business is via afliliate marketing. This is providing clicks, leads, and sales via affiliate programs such as clickbank and clixgalore. Profits can be up to 75% per sale. No products to stock as you act as an agent and many of the products are immediately downloadable off the net.

The internet has produced numerous new MLM. Whilst in the past multi-level marketing got a bad rap thanks to people alienating their friends, today MLM advertises online. There are hundreds of different MLM. Some like Global Domains International offer web hosting services, others like SFI offer traditional products - coffee, cleaning products, etc. Like any business an MLM does not grow itself and requires intellegience and work to succeed, but once start can it can generate its own momentum.

Another home business that my own wife has succeeded at is Ebay. Millions of products each day are sold worldwide via ebay. The main trick here is to source your product cheaply. Essentially Ebay is a combination of an electronic action house and mail order. Because the customer has to wait for their product to be delivered via post, they expect a discount to what they would have to pay in the store. However as you have no retail shop overheads, selling at a discount is still profitable. Like any business though watching the product margins and meeting customer demand are the keys to success.

During the start phase of any home business, I recommend that you don't rely on it as your primary income source as with any new business mistakes are made and growth can take time, but once this is achieved your home business might become your only business. You might need your husband to quit his job and have to help the new boss at home because the home business produces more income than any job he might have and you now need his help to mind the children!

Remember unless you try you don't know what your potential is.
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Nouveau Riche University makes money by getting its students to buy investment property - no matter how scary the market gets

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http://nruniversity.com/

(FSB) Scottsdale -- Several months ago Silvia Cuevas took stock of her life, and it was a profoundly unsettling experience. At 40 she had a solid job with a modest salary at the public library in Santa Ana, Calif. She'd carefully squirreled away some savings and bought herself a little house.

She was financially secure - and utterly dissatisfied. All around her, Santa Ana throbbed with the feverish energy of recent immigrants eager to cash in on the promises of America. A short drive from Disneyland, Santa Ana boasts one of the highest concentrations of Latinos of any city in the U.S., and these days it is a hotbed of entrepreneurial activity. Cuevas, though, felt as conservative, meek, and, well, dull as a church mouse in Vegas. "I was going nowhere," she recalls. "How was I going to find my fortune?" Then a girlfriend introduced her to Nouveau Riche University.

Not exactly a university, Nouveau Riche offers real estate investment classes -and a host of related products and services - to would-be tycoons. In April, Cuevas plunked down tuition of $16,000 and attended a weeklong program in Phoenix. Two weeks later, emboldened by her instructors and an advisor assigned by the university, she refinanced her home, taking out $200,000 - a large share of her equity.

She used the money for down payments to buy - sight unseen in one case - three investment properties through a real estate agency controlled by Nouveau Riche. By midsummer Cuevas' portfolio of investments had grown to include a condo in Colorado, three acres of undeveloped land in the Smoky Mountains, and a three-bedroom house in San Antonio. Her debt load has grown too, thanks to the hundreds of thousands of dollars in loans she took out on the properties, but she doesn't worry.

"I learned how to be bold at Nouveau Riche," Cuevas says. "They're the market experts, so I trust them to help me buy. I can't wait to make my next purchase!"

That's the kind of rah-rah spirit visitors encounter at Nouveau Riche (nruniversity.com), where the lectures are more like pep rallies, the tests are sometimes self-graded, and the homework is optional. Nouveau Riche has reason to cheer too. Co-founder and CEO Jim Piccolo claims that revenues will top $80 million in 2007, up tenfold since 2005, when the company was founded and the real estate market peaked. Piccolo makes money not only from tuitions but also from commissions on the properties his students buy and from the fees he charges for accounting, finance, and property-management services.

Remarkably, Nouveau Riche is able to attract huge crowds (a recent class in Phoenix lured 2,479 students) in a market that is declining rapidly. The Standard & Poor's Case-Shiller home price index (homeprice.standard-andpoors.com) shows that nationally prices fell 2.7% in the first quarter, more than in any quarter since 1990. In a late July conference call with analysts, Countrywide CEO Angelo R. Mozilo, who runs the nation's largest mortgage firm, said home prices were falling "almost like never before, with the exception of the Great Depression." That's not all. PMI Mortgage Insurance (pmigroup.com), a financial firm that tracks the market, predicts two more years of decline across much of the U.S.

Given those grim stats, why would anyone want to invest in real estate? Nouveau Riche borrows heavily from the investment philosophy popularized over the past several years by real estate guru Robert Kiyosaki, who wrote the bestselling advice book Rich Dad, Poor Dad. Like Kiyosaki, Nouveau Riche teaches that working for a salary is a fool's game; the road to riches requires leveraging debt to amass a portfolio of income-generating properties. Yet investing in rental properties, like all entrepreneurial endeavors, is hard work. A successful landlord has to know the market, maintain his properties, and retain paying tenants.

That doesn't seem to bother Nouveau Riche students, many of whom have seen their neighbors get rich flipping houses or renting them out during the boom. Judging from the callused hands and well-worn work boots spotted at a recent Nouveau Riche event, it attracts a blue-collar crowd for whom the promise of riches from real estate rings true at a gut level that stocks and bonds don't reach. "I know I'm not going to get wealthy working for the fire department," says Hector Magallanes, a firefighter from Los Angeles. "I'm working up the courage to take the risks I need to take to be financially independent."

Nouveau Riche makes it easy for would-be tycoons to get started. "We learned through our research that most students of real estate seminars never actually buy any property because they don't have the tools to take that first step," Piccolo says, "so we are offering them all the tools they need to build their portfolios."

At a recent seminar at a Hilton in Phoenix, Fix 'n Flip - a daylong course in the art of the fixer-upper - was standing room only. So was Creative Financing, in which students learned how to tap their retirement savings and their home equity for money to invest. Between classes, throngs of students flocked to the lobby to booths featuring affiliates of Nouveau Riche. Save Our Scores (or SOS, as it is called) helps high-risk borrowers boost low credit scores so that they can borrow more money at lower rates. (Fees range from $600 to $1,200.) Investor Concierge, the real estate brokerage firm owned by Piccolo and his associates, helps students buy houses and condos, arranges financing, then provides management services for their far-flung properties. (The firm's slogan: "Click a mouse, buy a house.") Meanwhile, the Nouveau Riche University Store did a brisk business in polo shirts, plus jackets with the college logo, a stylized eagle.

These days alumni groups are springing up in Atlanta, Boise, Tacoma, and other cities. What's on the agenda at their meetings? "We boast about our portfolios," Heather Echevarria, 29, of Boise, says. "We shop deals too." Echevarria and her husband, Ben, specialize in pre-foreclosure properties - that is, buying houses from cash-strapped owners who can no longer afford to pay their mortgages. Typically, she says, they buy houses for half their appraised value. Last year, the pair claim, they bought-and quickly resold for a profit - 75 homes in Idaho and Nevada.

But will other graduates of Nouveau Riche do as well? What happens if interest rates rise and the monthly payments on a variable-rate loan soar, or a tenant leaves? Will the investor be able to sell at a profit in a market where home prices are falling? Casey Serin, a 24-year-old programmer from Sacramento, had already invested in property (although not through Nouveau Riche) before he enrolled in one of its classes last year. "What they teach there is dangerous," he says. "They're selling you on getting rich fast-and that's a risky game to play."

Piccolo retorts, "There is no better time to buy, because real estate is on sale. You can never go wrong with real estate in the U.S. of A." He admits, though, that he has not bought any property lately.

Raised in Nebraska, Piccolo says he was a poor student, interested more in sports and cars than his classes. After graduating from the University of Nebraska in 1984, he moved to Phoenix and worked in the car detailing and design business. In 1990, Piccolo says, medical bills forced him to file for Chapter 7 bankruptcy and list debts of $650,539. Piccolo ran into more trouble a year later when he pleaded guilty to the theft of his girlfriend's new Mercedes-Benz. Although he denies responsibility now, Piccolo admitted to the court that he had dumped the car in the desert so that his girlfriend could collect an insurance claim of about $24,000; Piccolo said she'd complained that the car was a lemon. "I couldn't bear to see her hurt," he told the court. After three years probation, his felony conviction was reduced to a misdemeanor.

Not long afterward Piccolo discovered real estate. By the mid-1990s he had stumbled on the idea of consolidating investment seminars, offering students the opportunity to hear several gurus speak on various techniques. Out of that grew Nouveau Riche, which he and a co-founder, Bob Snyder, launched in 2005.

At 45, Snyder is a veteran of the multilevel-marketing business. "I'm good at building teams," he says, and indeed, he has been teaching salespeople for more than two decades, after being trained by Amway (amway.com), the global leader in multilevel marketing, in which sales reps are paid not only for selling products but also for recruiting more reps. To date, he has signed up 1,300 sales reps for Nouveau Riche. Working out of their homes, they sell two products: a 15-volume encyclopedia on real estate investing for $3,500 and tuition to the "college" for $16,000. The first five tuition sales don't yield a commission, but on subsequent ones the sellers get a 50% cut, or $8,000.

How does the company attract customers? It offers free one- or two-day intro classes. According to Andrew Yurasek, an independent regional advisor for Nouveau Riche, at a recent event in Shaumburg, Ill., the company rented Lamborghinis and Ferraris for six of its sales reps for the night so they could roar up to the hotel just as prospective students were filing into the Hyatt. "We want to generate some excitement," says Yurasek. Among the reps, he adds, were an architect, a housepainter, and an office worker, none of whom have a real estate portfolio. About 10% of those who come to the free classes buy the home-study materials or spring for the tuition.

As chancellor of Nouveau Riche, Piccolo doesn't teach any classes, but he is a regular on stage on the university's awards night, working the crowd of star-struck students eager to pose for a quick photo with him. At 50, he has the tanned good looks and boyish charm of actor Dennis Quaid, whom he resembles.

These days Piccolo is living large - and proud of it. "Only in America," he says, "can a guy who barely made it through college end up owning a college." He and his wife, Mary, own three homes, including a ten-acre ranch with a 22,000-square-foot house and a pool in North Scottsdale. Still a car buff, he boasts a collection that includes a Ferrari 360 Spider, a Lamborghini Diablo, and a Bentley GT convertible. He also travels in a Falcon 200 company jet. For their seventh wedding anniversary he surprised his wife with a cherry-red grand piano signed by Elton John. Cost: $100,000. Piccolo says he and his wife also own investment properties in Arizona, Nevada, Oregon, and Utah; Mary Piccolo manages the portfolio. Piccolo estimates its total value at $20 million.

Investor Concierge, Nouveau Riche's brokerage arm, typically sells students about 100 properties a month, most ranging in price from $100,000 to $200,000, says the firm's president, Craig Cottrell, 39. To date, Investor Concierge has racked up property sales on 1,100 units, most of them in Georgia, Michigan, and Texas. Over two recent weekends the firm moved 60 condo units in a complex in Fenton, Mich., a blue-collar town 15 miles south of Flint, at prices ranging from $60,000 to $67,500.

The way Investor Concierge structured the deal in its prospectus, the buyers put 10% down, borrowing the rest using an interest-only loan. Trouble is, the rents on the condos won't cover the total cost of owning them. No problem. Investor Concierge explains that it has arranged for the seller of the condo complex to subsidize the rent for as long as two years at above-market rates. The seller will also pay all the management fees and real estate taxes for two years. As a result the investors should be $145-a-month cash-flow positive. But what happens when the subsidies expire, and the buyer discovers he is losing money every month? Will he be able to unload his property or command a higher rent?

The way the Michigan real estate market is headed, it might not be so easy. According to Judy Brant, a broker in Fenton for more than 20 years with Coldwell Banker, the inventory of homes in Genesee County, which includes Fenton, averaged 2,000 units in 2005. Today it is 8,000, up 300%. When Brant heard that Nouveau Riche students had bought 60 condo units in her town - sight unseen - she said, "I'm speechless. The housing market here is tied to the auto industry, and prices are falling faster than you can imagine: 10% last year and another 10% this year. Who knows when it will reach rock bottom? As far as rental properties, it's hard to rent anything here now. Houses and apartments sit empty all over town. People are leaving because there are no jobs here. We're really suffering."

Despite these risky deals, Nouveau Riche's enrollment keeps booming and Piccolo's pockets keep filling, which lets him plan big for the future. The company bought 24 acres on top of a black-lava mountain north of Phoenix. In 2008, Piccolo intends to break ground on a new campus with modern steel and glass classrooms and four luxury dorms, each with its own pool and barbecue pit. The pools will be linked by a man-made river; students will be able to float from dorm to dorm, riding the river on inner tubes. "It'll be very theme-y," he says. "We're going to build a Disneyworld for investors and entrepreneurs."

[Via - CNNMoney.Com] 

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