Posted on July 3, 2008 @ 11:51 pm - Written by BawldGuy
This is a real simple one people. Flippers with at least 2-3 years experience will see themselves here, and nod their heads. They know exactly what’s what when it comes to what they do and what their real estate investor buddies do.
Ya see, even if the flipper does well, he’s paying ordinary income tax rates on his profits. And if not? He’ll get caught soon enough. Seen it too many times. Most flippers though, earn their profits fairly, pay their taxes, then move on to the next one.
‘Course they gotta take out money for themselves before the movin’ on part actually, you know, moves on. After ’bout the third or fourth one, it becomes fairly clear exactly what’s what.
Here’s the dirty little secret flippers won’t bring up while chowin’ down on the BBQ this weekend.
They very rarely retire well at all. They hit 50 or so, then realize the sun is setting quickly their chances for a stellar retirement. It’s not a good feeling. I’ve consulted with several 50-something flippers in the last couple years. It ain’t been pretty.
They’ve discovered all flippin’s got ‘em is a bigger paycheck, higher taxes, harder work, and more liabilities. And they can’t stop, or it’s back to whatever job they hated before they started flippin’ real estate. They’ve built themselves a prison with no doors. Read the rest of this entry »
Posted on June 29, 2008 @ 6:59 pm - Written by BawldGuy
When speaking to audiences in historically high appreciation areas, it’s common to hear them voice serious concern with regions I’m recommending. Their real problem? They’re lookin’ at appreciation at the cost of capital growth — theirs. They’re literally penalizing themselves to the tune of millions over the long term. In baseball terms, strikeouts are cool, but how many earned runs a pitcher allows per game is the real gold standard. No? Ask yourself if for the big game you’d want the guy who strikes out 12 batters a game but has a 5.3 ‘earned run average’ (ERA), or the guy who hardly ever strikes anyone out but only allows three runs a game?
Not a difficult decision, is it? ‘Course not. It’s obvious on it’s face. Why? ‘Cuz in baseball the winner is decided by how who has the most runs at the end of the game — not the team sporting the pitcher with the most strikeouts.
Appreciation = Strikeout Pitcher whereas Capital Growth = Very low Earned Run Average
Posted on June 27, 2008 @ 11:10 pm - Written by BawldGuy
There are plenty of things you can do, not the least of which is to recognize the sea change happening in real time before our eyes. I’m worried for your future. You should be too. And no, I don’t think your properties are gonna put you in the poor house, ‘cuz they’re not. This market correction will end, and at some point your properties will not only regain their value, but go higher.
The Problem?
If your real estate investment world begins and ends at San Diego’s borders, you have a big problem. If they don’t, takin’ your equities Outa Dodge will easily mean $1 Million in additional capital growth for most of you in the next decade. And that figure’s a relatively safe one. Talk about the tortoise and the hare. And for the record? It’s only in the fable that the tortoise wins. Where we’ll take you, the hares don’t stop and lollygag. All things being equal, those leaving San Diego with their real estate investment equity/capital will race past those who stay in town.
It’s a no-brainer. Those who leave now, will be working towards another $5,000 a month retirement income in the next 10 years or so, give or take. This isn’t a game. This is your retirement, and I’m serious as a heart attack about this subject. It’s what I do.
Do not invest in San Diego income property now, or keep what you have longer than it takes to sell/tax defer (1031 exchange) your way out. I’ve been tellin’ folks to buy SD property since Carter was in office. I don’t say these things lightly, as I understand the gravity of decisions based upon one’s future retirement income. But it’s the right thing to do. That makes it an easy call.
I’ll be in town this weekend, available by phone and email. I’m pretty good about gettin’ back to folks quickly. So Contact the Hairless One and let’s see what it’s gonna take to get your retirement back in high gear. Oh, and by the way, for clients doing tax deferred exchanges with Brown and Brown, the selling costs will be reduced by $10,000 or more 90% of the time.
Really — wouldn’t kid ya ’bout that.
Now for some kinda sorta on-topic weekend music. (Just go with it, OK?) Have a good one.
Posted on June 22, 2008 @ 6:16 pm - Written by BawldGuy
Each year that goes by, more and more real estate investors holding San Diego income property are beginning to see the light. Information is so easily obtained these days, it’s hard not to, isn’t it? At what point do ya throw in the towel, asking yourself who to believe? Speaking for myself, I can’t look people in the eye and tell them San Diego is the place for their real estate investment capital. I need my eight hours a night.
Besides, how do ya think they feel when coming across a well located Texas property offering roughly the same income as theirs, but selling for half as much give or take? Not to mention the other property isn’t a fossil yet. In fact, most of what they’re seeing is new to only 5-10 years old. “Geez, I could own 2-4 times what I have now, and not have to manage it myself.” Yep.
Sounds good to me. Take some time and give a listen to some of podcasts here. Then, if the spirit moves ya, get ahold of me and we’ll figure out what your next move might be. Sometimes, even for San Diego income property owners, the next move is no move.
Next time a local guy tries telling you how super San Diego investment property’s gonna be again, think of this, ‘cuz they ain’t tellin’ ya true. Notice how the ‘go-go’ dancers have evolved over the years. Wow.
Posted on June 6, 2008 @ 12:45 am - Written by BawldGuy
I hate infomercials hard. Then there are the cattle call seminars promising their spellbound audience great riches and early retirement through investing in real estate for cash flow. It’s not that the idea isn’t way cool, it is. But seriously people, the stuff they’re puttin’ out will make your lawn grow faster, but not your capital. And cash flow? Give me a break.
It’s the old ‘on paper’ vs real life thing. On paper, a house bought at the Dollar Store with stoopid high rent, makes real estate mogul type cash flow. Let’s look at this video frame by lyin’ frame, OK?
First Frame
Pulling the common sense card from the deck right off the bat, one’s gotta wonder — if they’re such great properties, why are the so dime-a-dozen cheap? Duh. ‘Cuz nobody wants ‘em, that’s why. Was the first clue a Glock is required to get in and out of the neighborhood? Real estate is a slave to the law of supply & demand. There’s nothing special exempting income property from that law.
I have clients who’d buy them literally by the dozen — for cash — if they were really what they say they are. I’d own a hundred of them by now. No, two hundred. Why not? They’re that cheap, right? And the rents are as high as properties selling elsewhere for five times the price. Pullleeeze. You know the guys on TV are actors. Real folks couldn’t keep a straight face.
In fact, most of what they’re seeing is new to only 5-10 years old. “Geez, I could own 2-4 times what I have now, and not have to manage it myself.” Yep.