For a special treat I got to do a local gig. Blue Diamond is a capital investment business based in Provo, UT. No plane required for this training. My colleague Kara Ausere and I made the trek down to Provo to train this group. We were right downtown literally where my father and my son Jordan, currently attending BYU, are roommates. Jordan came by to say hi and get a free lunch.
This class was interesting. The founder and owner of Blue Diamond Mark Bingham started a yellow pages company years ago and when he sold it he started investing. Blue Diamond Capital invests in real estate and small businesses. Mark saw me do a keynote and wanted BLI to come in and train the managers of the businesses he is invested in. It made for an interesting day and really a pretty good idea on Mark’s part. We had about 30 people in the room and I counted 6 businesses represented. Many in the class had a finance background which made it interesting. It’s a little different class where there are a lot of finance and accounting people. Not as many questions but a bit of support on concepts. Yes even these people can use a little financial intelligence. I do a big picture review of the statements and many of these folks are very specialized and have not seen the big picture for years.
We put a real estate slant on our material. We covered cap rate and had a little more focus on interest rate and how they affect value. In real estate, as with any asset as interest rates go up value goes down. With low interest rates right now real estate is a good place to be. We were able to illustrate that with some good examples.
The cap rate is a simple measure of return on a property. To get cap rate you take Net Operating Income (less depreciation) and divide it by the value of the real estate investment. This gives you a percent return relative to value. Clearly we want a high cap rate just like any other profitability ratio. It was a nice sunny day in Utah. I got to do a day of finance rather than another boring ski day.
Since Kara was with me on this trip, I’d like her to add her thoughts on the Blue Diamond experience. 🙂
It’s great having a local class because it gave me the opportunity to watch Joe train. I put the presentations together and it was nice to see how they are used in class. I was looking forward to going over the Return on Investment section but found that the Budgeting section had the most impact for me. I love to budget and I love to track my spending to make sure my family stays within our budget. I liked the discussion on budget variance and tracking where you ended up versus where you budgeted to be and doing an overall review. That’s something I haven’t done with my personal budget but as soon as I’m finished with my taxes I’m going to do that! I also really liked Joe’s story about USC and the alumni hot dog & soda budget problem. He has some fun stories and examples that illustrate the points he is making.