Random Thoughts Heading Into The Weekend
Posted @ 8:37 pm - Filed under Sez Me, Retirement, Weekend Thoughts
Chris Lengquist over at BBQ Capital - A Kansas City Blog, wrote a piece on gurus today. He gives the three choices investors have on their menu when starting out in the real estate investment world. It’s well worth your read, and he’s right on the money. He also makes the point that in any given area, there are pitifully few knowledgeable real estate investment advisors available.
There will be a post here next week on the paradigm shift in San Diego income property, which has quietly taken place right under our noses. With very few exceptions, I’ll probably not sell another San Diego investment property to a client again. Why? If you own a 2-4 unit property in San Diego you know how much it’s worth, even on today’s down market. It’s ridiculous, isn’t it? When we can go and find 40 year old duplexes for over half a million bucks, it’s time to adjust our outlook as investors here. If your duplex is worth that much now, who’s going to seriously consider it when you’re asking 3/4 million for it 10 years from now? You’ll be stuck. And instead of 30-40 years old it’ll be 40-50 years old — and counting. The cash flow won’t be nearly what others are getting in other regions in the country either. And the last time I checked, cash flow is the name of the game when you’ve actually retired. (Now there’s an original thought.)
Take your equities and get out of Dodge now. Over the next decade you will cost yourself $500K-1Mil by acting as if investors are still coveting your units. They’re not, and won’t be again. There are too many regions that are far more attractive on every level than San Diego when it comes to residential income property. That sound you hear is the train leaving the depot. Don’t miss it.
I left home the other day and got into the elevator with an elderly guy who lives in the project. He stood straight as an arrow, and had a Clark Gable smile. We talked until the elevator stopped on the way down, and an older woman entered. She asked the guy how his birthday went. His reply? “Pretty good, considering I’ve been around since the beginning of World War I — you know, biplanes.” Wow! He’s 93 years old, as clear headed as any of us, and pretty active. So we get down to the parking garage and he hops into his two year old Beemer sedan.
The point? When he retired at around 65 (have no clue when he retired) did he expect to be 93 and livin’ life to the fullest? I suspect not. We joke about today’s 50 is the new 40. Well, how ’bout today’s 90 is the new 75? This has crazy implications for the country as a whole, and you as an individual. If you haven’t planned for a pretty substantial retirement income, living to 93 in great health could be challenging. Imagine if his annual retirement income was just social security and a free & clear home. This obviously isn’t true since he’s a very dapper dresser, his car is probably more expensive his first two homes combined, and he was headed out to a social event. Those aren’t the signs of a retiree pinching every nickel. Food for thought.
The media is of course hyping the whole sub-prime loan issue. It’s not that they shouldn’t report what’s going on — they should. But after reading a random selection of articles on the subject you’d think it was October of ‘29. The underwriting standards are being moved back to the late ’90’s. This won’t last long, as the loan industry is just that. They loan money. And when they find themselves unable to loan enough of it, they’ll figure a way. They always do. This time will be no different. The damage done to individual borrowers in some cases will be life changing. The damage to the country won’t be noticeable a year from now. And the damage done in the last six months and the coming six months is less than a tenth of what the media would like you to believe. The DOW closed at over 13,000 for the first time in history. Boy, those guys are sure worried about this problem. You’ll look back at this subject next spring and wonder whatever happened to the huge sub-prime problem.
Finally, take some quiet time this weekend and imagine how you’d like to spend your retirement. What if you retired and had a reliable monthly income of $8-10K. How would you design your life? Would you still work a little? Would travel be your new job description? Or would you be CEO of your new startup company, We Spoil Our Grandkids Inc.? 
What does your retirement look like from today’s vantage point? As you peer through the looking glass, are you smiling with anticipation, or wondering what the heck you’re going to do? If you know what your retirement looks like, and it doesn’t seem that carefree to you, I have a message.
It’s not too late. After working hard for decades, why shouldn’t you have a superb retirement? The way to start down that road? Spend some time with your imagination and get yourself excited about the possible. Figure out where you are now financially. Consult someone who you’ve decided knows which way is north on the investment map.
Listen to them and make your imagined retirement a reality.
This entry was posted on Friday, April 27th, 2007 at 8:37 pm and is filed under Sez Me, Retirement, Weekend Thoughts. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.