Posted on October 8, 2008 @ 11:13 pm - Written by BawldGuy
Yes, lenders generally have tightened the reigns on real estate investors. As usual, the pendulum has travelled too far in it’s swing back from sub-prime, no-down nonsense. Now? 10% down is becoming more endangered than oil drilling off the California’s coast. And yet, we’re still closing transactions for our clients using 90% loans. Truth be told though, many have been converted into 80% loans. A lot of our cocky attitude has been adjusted for us, so to speak. Ain’t the first time.
Sometimes ya just gotta tip yer hat to the market, and go with the flow. Swimmin’ upstream is fun, but after awhile your admiration for the whole salmon saga rises. Is buying half a dozen income properties at 10% down better than three at 20%? Uh, yeah. But buyin’ those three is way mo betta than nothing.
Go with the flow. For the vast majority of small to medium investors, capital growth is the name of the game. Though I’ve seen this movie a few times before, and loved the part when the buyin’ gets really fun, this is different. This market, in my experience, is the most target rich environment I’ve seen in real time.
How would a real estate investor describe a beneficial perfect storm? Read the rest of this entry »
Posted on October 3, 2008 @ 9:23 pm - Written by BawldGuy
When last we left our local couple, they’d been told to, surprise surprise, Get Outa Dodge! We outlined what they’d been advised to do, and gave a snapshot of what might happen over a five year period. Though Jon and Jill get far more detail, with all the analysis you’d expect, plus their own personal Purposeful Plan, you got an idea of why they should be putting San Diego in their rear view mirror as it relates to real estate investing.
As you may have noticed, I eschew photos matching the day’s topic from time to time. Tonight’s one of those times. Also, I wanted to grab the opportunity to use the word ‘eschew’ in the post.
Today we’ll take a snapshot of what might happen if they’d decided to remain in San Diego, hoping for a better future. Let’s first review where they are today.
They own both their primary residence and a local rental house free and clear. The sale of the rental will generate $200,000 give or take. The family’s income is around $127,000 yearly. They live frugally. Their credit is excellent, and they have $50,000 cash savings, which will act as their Sominex Account (cash reserves). You can read what I advised them to do by reading Wednesday’s post.
We’ll make some assumptions first. Read the rest of this entry »
Posted on October 2, 2008 @ 12:03 am - Written by BawldGuy
If you wanna catch up, please read the post preceding this one, as it sets the table for tonight’s post. The pics for this post are for us to share as completely unrelated enjoyment.
OK, let’s get this road on the show. 
I”m going to give a snapshot of what I plan to tell Jon and Jill.
At 42, they’ve given themselves a head start over most by having already invested in real estate. Also, they have cash savings of around $50,000. This will act as their Sominex Account. (Cash Reserves) You know, sleep at night? They also own the family home free and clear. (Grandpa cheering in background.)
Their stated goal is to retire sooner, rather than later. Jon is not lookin’ at 65 as retirement time. If he could retire around 4:30 yesterday afternoon he would. Our end game is tax sheltered cash flow for retirement. Duh. First however, we must grow their capital. All retirement income is, is a yield on capital. The yield is, give or take, the same for $3 million as it is for $300,000. The idea is to be the guy with $3 million. The yield’s the same, but the dollars? Not the same.
The net equity in their rental house is around $200,000 — give or take. It will go on the market immediately. Since they paid $250,000 for it, they’ll sustain a long term capital loss. A tax deferred exchange will not be necessary here. Read the rest of this entry »
Posted on September 13, 2008 @ 10:57 pm - Written by BawldGuy
This’ll be short ‘n sweet.
When I first recognized a correction was headed our way, back in ‘03, I made plans to adjust. Very shortly thereafter, Brown and Brown was on its way Outa Dodge. The correction hit like Satan’s hammer in late summer of ‘05. We were ready for it.
If it wasn’t for our own Purposeful Plan, the firm, and our clients would be stuck in San Diego wondering why nobody wants to buy their ancient income properties for prices demanding 40% down and more in order not to lose money every month.
Meanwhile, back at Outa Dodge Ranch, real estate investors all over the country were discovering more vibrant markets. Our clients were among them. The best return for them was being out of San Diego’s market. Over the next 10-20 years, it’ll mean an additional $500,000 to $2 Million per investor in terms of net worth.
So tell me again why yer holdin’ on to your San Diego income property like a dog with a bone? Many of you missed the bus the first time, before the market correction hit. Don’t miss it the second time — which is pretty much, well, uh, now.
What does it mean to your retirement? In terms of retirement income it means the San Diego real estate investor who gets their equity Outa Dodge now, will receive an extra $2,500-12,000 — every month.
Most folks, if they never benefit from more than 5% annual appreciation, but make use of prudent leverage, will take home an extra $5,000 monthly just by executing a tax deferred exchange out of San Diego, or any place like it — now. It’s only at that point it’s even possible to resume some kind of positive capital growth rate. (Northern and Central California — you listening?)
That ain’t chump change, as Grandpa used to say.
No, it ain’t.
So, ya gotta ask yourself — why? Why haven’t you sent me a note, or hit the Contact BawldGuy thingy, to begin a conversation? I’m the easiest guy around to get a hold of. Ask anybody. Have a good one.
Oh, almost forgot. GO CHARGERS!!!
Posted on September 10, 2008 @ 10:49 pm - Written by BawldGuy
Today let’s forget about everything but your initial motivation for investing in real estate.
What was it?
Has it changed?
No?
How’ve yer San Diego equities been goin’ lately?
Think it’s gonna get all better soon? Think yer gonna get gas outa that old dead pump?
Yes? Check again. We just began the fourth year of, ‘It’s gonna be better this year’.
No?
Then why are you just hangin’ around worryin’ about all the money you’ve lost lately?
Wanna do somethin’ about it instead of just worryin’?
Yes? Great — then let’s go back to the first question.
Why’d you invest in real estate in the first place?
Exactly. Your retirement.
Think stayin’ the course in San Diego is yer best bet?
Really?
Me neither.
Call me. Write me. Find me whatever way you need to. Let’s get your original agenda back on track with a Purposeful Plan. One that doesn’t include watchin’ yer capital shrink for yet another year.
Focus on the reason you invested in real estate in the first place. Your retirement.
Have a good one.