Posted on September 19, 2008 @ 9:01 pm - Written by BawldGuy
In January of this year I thought it apropos to write about the one question many investors avoid addressing.
What would I have gained if, for the next 5 years, my property went up nada, nothin’, zero, zilch?
I think you’ll enjoy it. Given the last several weeks events, I think it’s worth revisiting. Not that I think there wont be pockets of appreciation around the country, but still, just sayin’…
Have a great weekend.
Posted on September 18, 2008 @ 11:33 am - Written by BawldGuy
A couple months ago I wrote a post talking ’bout those who insist on chasing phantom cash flow properties. They hear the stories, even view the so called ‘proof’ of income and expenses showing Garden of Eden properties spinning of double digit cash on cash returns. These returns come from locations reminiscent of Wally ‘n Beaver’s neighborhood, with tenants who must surely have been friends of June Cleaver.
Yeah, and mutual funds will generate 10% annual returns for your 401(k) account, year after year. Divide that number by two, then subtract a little more, and you’ll then be rowing your leaky retirement dinghy on Lake Reality.
This week alone I’ve spoken with four real estate investors who rubbed that lamp and made their wishes while putting their hard earned investment capital into Lake Cash Flow, only to find the lake was home to the vicious cash flow eating piranha. They fell prey to the same approach that’s gotten us where we are today. What’s that you ask?
It’s the school of wishful thinking. It says even though somebody who should know better says up is down, then it must be OK. It says that you can create a real estate version of your personal ATM simply by puttin’ your money in the slot and waitin’ for the cash to come back at ya in an orderly, predictable fashion.
Pullleeease.
Here’s the post mentioned above. Read it while picturing Grandma. Real Estate Investors: Chasing Pretend Cash Flow Surest Path To Pretend Retirement coulda been written by most of our grandmas.
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.
Posted on September 8, 2008 @ 10:29 pm - Written by BawldGuy
Early adapters will be the big winners when it comes to capital growth and investing in outa town real estate. Those who insist on keepin’ their capital here in San Diego will look back a few years from now, realizing they could’ve done much better. In just five years the difference can be far more injurious to your retirement plan than you might imagine. How so?
San Diego (California in general) takes another couple years to stop the decline. Another to stabilize. Two years at 2-5% appreciation. Before ya know it you’ve raised enough to pay for half your sales costs in five years. Let’s party.
OR
You can take yer $100-500,000 into a growth region or three and get 3-7% for the next five years. Even if it’s say 5%, if you executed a tax deferred (1031) exchange into say $1 million of property, your first year you’ve grown by $50,000. Even if your $450,000 duplex or rental home in SD went up 10% you’re still behind — and the gap only widens.
BawldGuy Axiom: Waiting for California (San Diego, Palo Alto) real estate to resume normal capital growth rate is akin to waitin’ for your cat to bark. Definitely not a good use of yer time — or your capital.
This cat wouldn’t bark no matter what drug the vet gave it. Sweet relief from broken leg suffered in three story miscalculation. The bird made a clean getaway.
You might as well be waitin’ for yer cat to bark as wait for the San Diego market to keep your capital on the growth trail. Adapt to the new reality. It’s now almost the same trading to other states as it is staying home. And in the end? Your capital doesn’t know where it is. It does have a need to flourish though. The Boss’s cat wasn’t even gonna
Texas, including Dallas and surrounding areas, Austin, Kansas City, and hopefully soon, the Carolinas and Georgia — all better performing markets than San Diego. Not even a close call.
Oh, and for the record? No matter how long you stare at yer cat, it ain’t gonna bark.
Maybe while yer starin’ at Fluffy, you can send me a quick note. We’ll talk about how a Purposeful Plan will most assuredly make the difference in turbo charging your equity’s growth rate. Have a good one — and thanks Kelley.
Posted on September 5, 2008 @ 11:30 pm - Written by BawldGuy
Every few weeks or so someone asks me if I’ve ever published a short list of some of what I call BawldGuy Axioms. My reply is typically something akin to, “That sounds like a good idea. I’ll see if I can’t make it happen.” Well, here we are. A baker’s dozen, selected at random.
The pics? If you see a connection between the pics and the axioms, stop reading, lay down, and take a nap. 
BawldGuy Axiom: We’ve all had tough questions for which answers were difficult to find. The answers that you’ll never find though, are to the questions you never knew to ask. The consequences can be severe.
BawldGuy Axiom: Garbage in, garbage out is just the modern way of sayin’ what Grandma taught me. One of her favorite sayings was, “‘Bout the time the farmer got the old mare to work without eatin’, she died.”
BawldGuy Axiom: Grandma said, “The farmer who plants wheat in the spring is not surprised when harvesting wheat in autumn.” Translation: Invest in real estate located in growth areas, and ya won’t be shocked when yer net worth grows impressively. Read the rest of this entry »