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 4, 2008 @ 12:31 am - Written by BawldGuy
It’s so easy to talk about moving real estate equities from here to there like your rearranging furniture in the living room. In practice it takes real experience, knowledge, and expertise to pull off. Though I’ve ‘captained’ hundreds of tax deferred exchanges (stopped counting), each one has to be executed to near perfection ‘cuz that’s the only thing the IRS understands. It’s not rocket science, which is what so many real estate folk want you to believe. Still, do it with a cocky attitude and you’ll find out in real time what a bad day’s all about. 
For the record, Brown & Brown has never, not once, failed to successfully finish a 1031 exchange. How do you know that’s true? ‘Cuz I’m alive, dude! What would you do if an agent messed up your exchange, costing you six figures in capital gains taxes? Exactly.
Let’s talk nuts and bolts first. How do you sell a property in a place like San Diego these days? That’s no walk in the park, as you may have guessed. It’s not like yer able to head over to the parts store like Grandpa used to, when the family jalopy needed work.
Gonna be brief tonight.
When selling property in a buyer’s market, which is also known for it’s relatively high prices, you must be serious. I’ll only talk tonight about the first step, which is simple as pie. Read the rest of this entry »
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 »