Posted on February 3, 2010 @ 8:46 am - Written by BawldGuy
Early last month I wrote a piece about growing capital and creating solid cash flow, much of it sheltered, while experiencing no appreciation whatsoever. The bottom line was surprising to many. Their capital nearly quintupled — while simultaneously creating reliable retirement income. Regardless of whether the capital grows by a factor of four or five, or less, the result will be far more palatable than a 40% loss a few years before your scheduled retirement, which is what’s happened to so many good people.
BawldGuy Axiom: Figuring return on disappearing capital is oxymoronic. Treating appreciation as anything but a luxury is akin to walkin’ in an unmapped minefield. Read the rest of this entry »
Posted on December 1, 2009 @ 5:54 pm - Written by BawldGuy
You might be wondering why anyone would even have rent increases on their menu these days. Fair enough. But there are regions in which the future will indeed include rising rents — in fact the last 12 months have seen rents head northward for the folks who’ve invested in the Texas neighborhoods I’ve recommended. It’s been roughly 2-4% in our real life/real time experience there. Just food for thought. 
My decades as a real estate investment broker have led me to understand how landlords can rationalize just about anything, especially when it comes to direct dealings with their tenants. This is a good time to recommend professional management, as my stance has always been that your income property should work for you, not you for it. It’s not always feasible, and I get that, but if it’s at all possible, at least consider it seriously.
The question is often posed, “Should I always be on the cutting edge of market rents?” OR “What will happen if I raise my rents and they all move out?” There are myriad iterations. Read the rest of this entry »
Posted on September 21, 2009 @ 11:55 am - Written by BawldGuy
This isn’t about keeping something out of your backyard, it’s about whether or not it makes sense for you to invest your hard earned capital into your own area’s real estate. If you live in San Diego as I do, you know what the history of real estate has been. In a nutshell, if you invested and let it be, depending upon the cycle, sooner or later (never real long) your capital grew — big time. That was the case from the 1970’s ’till late 2005 or so.
For the record, San Diego is not, by any stretch of the imagination, the Lone Ranger in this. It’s true for California in general. Look at where you live. Is the median price of a home affordable for the typical family? No? See, it’s a matter of degree. San Diego is ecstatic cuz their median home price is now under $400,000! What’s your region’s median price? If it’s much over $200,000 the regular folk are beginning to be crowded out. If that’s the case, your 1-4 unit residential income properties are already becoming less attractive.
Enter what appears to be a paradigm shift — in fact two . Read the rest of this entry »
Posted on September 14, 2009 @ 7:42 pm - Written by BawldGuy
You don’t hafta own debt free income property in San Diego, or Palo Alto, San Francisco, Orange County — heck, the west coast in general, to know how much of a value hit you’ve taken recently. For so many regular folks who’ve called me, the conversation often follows the same script. The good news (no always) is they own free and clear residential income units, usually 1-4 units per property. The bad news is they’ve dropped in value anywhere from 25-50% depending upon where they are and when they were acquired. Ouch and a half!
There are many areas like San Diego, where many of these calls originate. When duplexes are still selling for $300-450,000 with Net Operating Incomes (NOI) of $15,000 or less, the numbers simply don’t work for 90% of the investors out there. When it still requires 35% down just to break even every month, folks tend to look elsewhere — especially these days. There are several pockets around the country where a 20-25% down payment will yield positive cash flow from Day 1. Ironically, those alternative markets are more likely than not to offer better relative locations along with higher quality tenants to boot. Read the rest of this entry »
Posted on September 2, 2009 @ 3:28 pm - Written by BawldGuy
Last week you got that raise. At 40 you’re making what you thought you would be at 50. Way to go! Once the raise kicks in you’ll be banking more Benjamins than ever. And that three unit property you bought back in ‘99? It’s cash flowing like an ATM thank you very much. You’re in the money — and things are really looking up. As a matter of fact, those units have gone up over $100K since you bought them — even after the current market correction.
How could things be any better? The answer? Easy.
Let’s do this by employing just a little Socratic questioning. Read the rest of this entry »
Posted on July 29, 2009 @ 4:10 pm - Written by BawldGuy
Depending upon your current status — that is, owning income property in regions like San Diego — the latest bit of reportage from our friends at Case Shiller indicate the latest trend. Let’s first look at a snapshot of what’s happened in both the Dallas, Texas and San Diego real estate markets for the year ending this past May. I’m not an unbridled fan of Case Shiller, but I do respect their work. My only objection to their analytical conclusions is how much weight is given to distress sales in any given market. Markets, being local if nothing else, aren’t interchangeable. But it’s just a quibble on my part, nothing serious.
They found the general area of Dallas doing astoundingly well vs the rest of the country. Counting everything, the year ended in May showed that area of Texas, known locally as the MetroPlex, was the most resilient real estate (housing) market in the nation. Told ya so. Read the rest of this entry »
Posted on July 9, 2009 @ 8:06 pm - Written by BawldGuy
No big deal, just wanted to throw out a few thoughts I’ve been having lately on the ’sick’ banking industry. You know, the one whose giants have already offered to pay back government money received recently. Those sick banks. What goes largely undiscussed in most places I rely upon for informed opinions is what these banks have been doing for quite awhile now.
But first a quick trip down memory lane.
Back in the ’80’s and ’90’s as a way of giving back, I taught house agents wanting to understand the investment side of real estate some basic analysis. Of course there’s really no way to be basic when it comes to analysis. Once ya leave the realm of arithmetic and begin throwing around 50ยข phrases like ‘before tax’, ‘after tax’, or even worse, ‘internal rate of return’ — things would spin far out of the gravitational pull of Planet Basic. Read the rest of this entry »
Posted on June 24, 2009 @ 7:21 pm - Written by BawldGuy
Hey AI — Let’s apply your Devil’s Advocate take to San Diego. AI’s thoughts can be found in the comment section of yesterday’s post.
Here are Another Investor’s Devil’s Advocate positions, followed by my thoughts. For the record, AI is one smart cookie. A very experienced investor with a keen analytical mind. Talking with AI is one of my new favorite things to do. So, here we go — AI’s point by point Devil’s advocate position — and my answers.
1. People want to live in SD. Read the rest of this entry »