Posted on August 28, 2008 @ 10:53 pm - Written by BawldGuy
I often make economists the butt of jokes. I remember one time a line by Johnny Carson. “If all the economists were laid on the ground head to toe, it’d be an excellent idea.” He didn’t think much of them that night. They want us to drink their own special recipes of Kool Aid, but don’t like it when folks notice they’ve predicted 13 of the last 4 recessions. That, uh, includes the recession of 2008 — yet another in a long line of recessions that never were. Yet since the last quarter of 2007, ya couldn’t swing a dead cat (pun intended — ya gotta read the linked post) in ‘Cable TV World’ without seeing a talkin’ head warning us of the recession around the corner. There were a couple who even had the cajones to say out loud and in public that we were already in one.
Makes ya wonder just how stooped some of them think we all are, doesn’t it?
The current and persistent real estate market correction has been the topic of debate since its birth some three years ago. I’ve seen this movie a few times before. I know the ending. Each time another sequel comes to theaters, the debates are similar. Most center around how harsh the correction will be, and when it might run outa steam. To that end, I ask you today,if you would do me the favor of reading a post published here almost exactly eight months ago.
It talked about real estate investing in 2008, and also included my thoughts on the possible life span of this correction.
I reread that post today. My thinking hasn’t changed. In fact, I’m more convinced than I was in January about what the last reel of this sequel holds for us. Plainly put, it’s my contention this time next year we may look back to the late summer, early fall months of August/September/October of 2008 as the time when the market began in earnest to execute it’s painstakingly slow U-Turn. Recoveries are like like emerging from recessions in that it’s only in hindsight that we pinpoint their beginnings.
I won’t go into detail tonight about on what hook(s) I’m hangin’ my ‘end of correction’ hat. Suffice to say the well known disclosure applies. My opinion, along with my heavily armed Starbucks card will get us coffee and cookies most days.
That said, what I thought was gonna happen has been playing out, more or less, since January. There are several trends which, when isolated may not mean much, but when seemingly choreographed with each other, can become powerful forces. Again, I’ve seen this movie, lived it actually a few times already. It’s my opinion the last reel is already playing on the screen.
We’ll see. Again, thanks for reading the January post. I’d love to hear your thoughts.
As I said back then, be nice, be respectful, and let it fly. Have a good one.
Posted on August 27, 2008 @ 9:46 pm - Written by BawldGuy
Ironically, pics tonight will be of Durango and Silverton trip. As you might expect however, after this post there’ll be San Diego pics galore just around the corner.
It’s now been almost five years since we begun refusing to sell anyone San Diego investment property to investors. Shortly after Labor Day we’re reentering the San Diego market. Don’t jump to any premature conclusions about this turn of events. We still won’t sell local property to investors. The lone exception is if their Plan is to live there also. Even then, it’ll be a last resort.
To subtle? We’re comin’ back to help local real estate investors move their SD equities Outa Dodge and into far better areas for capital growth. That is why you invested in the first place, right? You know, grow yer capital so your retirement would be the best you could make it? Thought so. We will not assist folks in the acquisition of local property. The lone exception will be for those few who will be living in the property. Even that exception will be considered a last resort. See? No change of heart whatsoever. We believe with all our hearts San Diego is truly Paradise — as a place in which to live. It’s where real estate investment portfolios go to die though. Just so ya know where we stand. Kinda left subtle in the dust with that one. 
BawldGuy Axiom: San Diego (Paradise) is the best place on earth to live, but not the region in which real estate investors should put their capital. San Diego income property is over for the foreseeable future. Read the rest of this entry »
Posted on August 27, 2008 @ 12:16 am - Written by BawldGuy
Have some cool shots of our trip that I’ll disperse randomly tonight, and for the next few nights. Just so ya know. This first shot was ‘posed to be of two people, our hostess Vanessa, and me. Turns out it was two people, just not me.
In Durango, Colorado as in San Diego, real estate values are way up the last decade, even after the steep decline of the last three years. If you can only afford a $400,000 home, the fact that the $600,000 place yer lookin’ at used to be $700,000 doesn’t really matter, does it? Hardly.
Same goes for income property. Read the rest of this entry »
Posted on August 25, 2008 @ 7:07 pm - Written by BawldGuy
Things not always going as planned is par for the course when traveling. As you’ve no doubt surmised, I”ve been without wifi since early Friday morning. I’m writing this as we careen bumpily through the air back to Paradise from Durango via Denver. The thought of turning on the laptop tomorrow morning has me feeling like I used to sometimes when I had to run 15-20 miles while training for marathons. I knew I had to do it, but, well…
The email is gonna be daunting, as Josh, the Brown coming right after the ‘and’ in Brown and Brown, also wasn’t able to access email. Even with slivers of time appearing in our schedule, we either were away from our ‘puters or with someone. Life in the left lane — seminars in Durango. Sweeeeet.
Speaking of seminars. The best question of the day? “What’s yer take on cash reserves?” Thanks fer teeing it up, Big Guy. Gotta love those Sominex Accounts. Old Skool all the way.
So, Durango.
San Diego is still Paradise. But it has nothing, nada, zilch on the infinite gorgeous views offered by Durango. Whether is was by glancing down Main Street downtown, or any of the various places we found ourselves, the views were incredible. Mountains, rivers, streams, farms and ranches with cattle, horses, and whatever else we saw lookin’ back at us. Durango is much like San Diego in some ways. Real estate in Durango was, like San Diego, very high priced. Read the rest of this entry »
Posted on August 19, 2008 @ 10:27 pm - Written by BawldGuy
Just how does a real estate investor grow their capital in a stagnant market? Let’s first look at what it takes, lookin’ at the big picture. The first assumption is your market isn’t goin’ up in value. Also, you’re convinced it’s not likely to go up much at all over the next several years. What constitutes a stagnant market changes depending upon whom you’re asking. San Diego real estate investors would, ’till recently, turn their collective nose up at only 5-8% annual appreciation.
In many markets, most in fact, property values are simply not movin’ up. In fact, if they’re holding their value, owners are learnin’ to claim that as a moral victory. Tonight is for the stubborn cusses who won’t leave town with their capital ‘cuz any property not managed by their hands on, ‘control issue’ selves will die a gory death.
Here’s what the competition looks like. Prudently leveraged buys in growth regions. Even with what I call Grandpa’s Leverage, the capital growth rate at just 5% yearly will hit around 8% give or take for a five year hold. That’s sans before and after tax cash flows — only value increase + the loan’s principal reduction was used. (Hey, I said simple.) That means your capital growth rate upon executing a tax deferred exchange at the end of year five would probably exceed 10% annually. That would be after tax, or to be really picky, after ‘deferred’ tax.
Tonight let’s touch on controlling property through long term lease/options. Read the rest of this entry »