Posted on September 3, 2010 @ 8:54 pm - Written by BawldGuy
When we want to build a 10 story building, once the ground is leveled, we dig the footings for the foundation. But even before that we must consult engineers to find out just how large a foundation we should be pouring in the first place. The larger it is, the bigger the building we’ll be able to erect — duh, right? To the extent your retirement is built on your real estate investments, how you began back on Day 1 will almost always have a direct impact, for good — or not — on how your retirement turns out.
How do I mean that?
Obviously, investors must begin at the level at which they’re financially capable, and at which they’re able to remain in their comfort zone. I don’t care how much investment capital you have, if you’re not comfortable investing more than 5% of it, you’re simply not gonna do it. It’s how almost all of us are, right? There are exceptions of course, but you get the idea. Read the rest of this entry »
Posted on February 27, 2010 @ 9:02 am - Written by BawldGuy
As I was finishing a very simple, but delicious four egg cheese omelet topped with some taco shop salsa, (hhmmmm, good) a conversation from a couple days ago popped into my head. A real estate investor asked an excellent question. It forced me to pause awhile before answering. It wasn’t that the answer wasn’t coming to me, it was how to frame it. The questioner was gonna hear an answer they didn’t necessarily bargain for, and how it was presented was important to me. I didn’t wish to offend or cause hurt feelings. The question?
“In your opinion, what is the most common hindrance to the real estate investor’s chance for long term success?” Read the rest of this entry »
Posted on January 19, 2010 @ 5:31 pm - Written by BawldGuy
Ever wonder about the ‘known fact’ that when you retire, you’ll automatically find yourself with vastly reduced income? Given any thought to what that implies? I have, and for quite some time. Granted, for the small fraction who’re big wage earners, it’s more likely to be true than not. You may agree with me though, that at least the 80/20 rule probably applies. But if you’re in the vast majority of wage earners, it simply doesn’t have to be true, nor should it be.
What the heck am I talkin’ about?
Let’s create a case study of sorts. We’ll construct a typical 35 year old couple. Their goal for retirement is to quit working at 65, sooner if possible. They both work, have a couple kids, and are savings/investment oriented. They gross a combined $95,000 a year — him as the manager of a Costco store meat department and her as a pre-school teacher. Read the rest of this entry »
Posted on September 28, 2009 @ 6:05 pm - Written by BawldGuy
Today I’m addressing the investor interested in growing their net worth through real estate. I’m not talking about those who are investing solely for the benefit of monthly cash flow. Furthermore, there is much room for folks to disagree with what they think the #1 most abused principle might be. I think it’s this one. I’m sure it’s a frequent hot topic around the diner table in your home, right?. 
Regardless of the passage of time, one of the constants remaining firmly implanted in many investors’ mindset is the idea that an investment property without abundant cash flow is to be avoided at all costs. The problem inherent with that school of thought is rooted in a few related principles, plus the difference between today’s realities and Grandpa’s memory of the way ‘it used to be’ — which in reality means to Grandpa, ‘the way it should be’.
The Principle in play: To the extent you go for growth you retard cash flow — and vice versa. Read the rest of this entry »
Posted on September 8, 2009 @ 5:49 pm - Written by BawldGuy
A client once observed something about how some folks seem to live their lives. He’d seen a video of an interview of both Steve Jobs and Bill Gates in which Jobs said the following, loosely paraphrased:
Steve said, about Bill’s philanthropy — “Bill decided he didn’t want to be the richest guy in the cemetery.”
That’s an incredible observation, and one, at least for me, having many potential applications.
For instance, how many times have you said to yourself, “When I get to this point, I’ll do this particular activity”? Speaking for myself it’s been a real surprise how many times I’ve said that, and the contingency for which I was waiting had nothing, nada, zilch to do with either more money, or my ability to make it happen without that contingency becoming reality. Bill Gates has been able to transform himself into a hugely effective philanthropist simply because he made the decision to do it. Read the rest of this entry »
Posted on August 13, 2009 @ 9:30 pm - Written by BawldGuy
Those born in the 60’s, in their 40’s now, are part of a demographic which I’ve called ‘Tweeners’ for lack of a better name. Between what is the next logical question, right? They’re makin’ significantly more money than their 30-something counterparts, at least most of ‘em are. Their kids are older too. They’re starin’ at college expenses either imminently or in about 5-7 years, give or take.
The big difference though is time. A 40-something earner who’d been diligently forkin’ over part of their paycheck to their company’s 401(k) the last 15-20 years have been rocked big time by the huge downturn in the stock market. Most have experienced a drop somewhere between 40-50%, seemingly overnight — a literally chilling development when you’re lookin’ 50 squarely in the eye.
Tweener? Yeah, ‘Tween a rock and a hard place’. Read the rest of this entry »
Posted on May 27, 2009 @ 3:38 pm - Written by BawldGuy
What’d'ya mean why? What an inane question. Maybe — maybe not. When I ask that questions to potential new clients in my office or on the phone, more times than not I get a bit of stuttering or an impersonation of crickets. I’ve surmised over the years that much of the reason for those hesitant reactions is they’ve never been asked to specifically delineate their position.
Whether you’re a current or wannabe investor, how would you answer the question?
These are the most proffered responses — in no particular order. Read the rest of this entry »
Posted on May 26, 2009 @ 7:24 pm - Written by BawldGuy
Here’s a very solid comment with an often asked question posed by Matthew. He was commenting on the post immediately preceding this one.
I know that what you are saying is true overall and the economics work out positively, but I do have one question. It seems that when many real estate agents recommend purchasing property as a tax shelter, they neglect to mention the interest that you are paying the bank over those 30 years. How does the interest paid (vs. buying all cash) figure into the equation? I am just thinking about the approximately $250,000 in interest that they’ll be paying if they get the 50% loans.
Originally, the primary goal of the investors in the example had been retirement income — laudable if before tax income was by definition synonymous with after tax income. Alas, for far too many that’s woefully untrue. I’d advised this retired couple to acquire two properties using 50% down payments. The result, without going through the details was a significant increase in after tax monthly cash flow. Read the rest of this entry »