Real Estate Investors — Ways To Give Yourself A Fighting Chance In 2008
Posted @ 12:41 am - Filed under 1031 Exchanges, Real Estate Investing, Purposeful Planning, Real Estate Markets, Buying Income Property, Sominex Account, Market Correction
So Wednesday was the big day! Yeah, I know it was Tuesday. Don’t know ’bout you, but I didn’t lift a real estate finger on Tuesday. 
The New Year seems to hit the road running at breakneck speed — and regardless of the intense planning in which many of us invested so much time — we often seem caught unawares.
So many times we find ourselves in that position because we simply haven’t been completely honest with even ourselves. Purposeful Planning, especially in these ah, interesting times, requires nothing less of us.
Planning sometimes makes us reach into where we live. It requires an honesty with which most of us are either uncomfortable or not acquainted. As an example, if you are in middle management, you have to be honest with yourself about the time it might take to become president. Writing a goal saying, “By end of year 2008 I will be president of Widgets Inc.,” forces you to be brutally honest with yourself.
Can you make that kinda leap in 12 measly months? Which leads to — Do I even have what it takes to be president?
That’s honesty.
When setting your investment goals, both for the next year and the long run, don’t shortchange yourself. Don’t talk yourself into being Donald Trump, but don’t underestimate what’s possible. Times are changing. Paradoxically, they already have. Both are true. The correction is old news. The current change is in lending. (underwriting)
Yawn.
If a borrower’s credit is a tad sub par they’ll pay a little more for the loan. Sorry, but that’s not only the way it’s supposed to be, but the way it was for the first…….30 years of my career for Heaven’s sake. Change?
How ’bout Back To The Future?
Now back to planning, setting goals, and being honest with ourselves.
There are two very common mistakes investors make when planning.
They woefully underestimate what they can accomplish with the capital available They magnify a setback into the hairy spider that ate Ohio.
Both mistakes can produce unwanted, even totally unintended consequences. In the end they both leave large stashes of cash, your cash, on the table.
If you think you can grow your capital to $X by Y date, ask yourself how you arrived at that number and that date. Ask an experienced pro what is possible. You’d be surprised to find out what’s possible in today’s economic environment.
Flowers still grow in the meadows — amongst the trees still standing tall around them. Forest fires seem permanently destructive in the moment, but years later they’re more beautiful and healthier than the day before the fire.
Substitute correction for forest fire, and you begin to get the picture.
When the seasons change from summer to fall to winter, we don’t gather around the kitchen table for a family meeting. We crank the heater on, or grab our coats to stay warm when outside and go about our business.
Understand the ongoing correction. Notice it’s affecting different regions in varying degrees. Some not much, some drastically. I have an idea. Why don’t we invest where the flames of the correction are running into natural ‘fire breaks’?
$100,000 in 20 years can easily grow into $2 Million or more. I’ve seen folks take $200,000 +/- and turn it into over a million bucks in five years. ‘Course you gotta have a few years of cartoonish appreciation. Don’t underestimate what’s possible in a market where cartoonish appreciation is no longer the star of the script.
All this changing market means is you actually have to know what yer doin’ to get ahead now.
BawldGuy Axiom: Don’t ever invest based upon anything more than pedestrian appreciation. Investing has its own built in risks without making new ones as we go. In fact, because we counsel the long term, big picture view, counting on appreciation at all is at times, folly. Long term are you up or down? The last 50 years says you’ll be up over time. That’s time measured in years, not months people.
Been knocked down by this correction? Join the club. In today’s investment atmosphere you can do more with less than you might think.
Think of your own situation and dollar amounts as you read the following.
Let’s say you own property valued around $4 Million give or take a mil.
A seasoned pro can look objectively at your current situation and give you a better and surely more clearly focused picture.
Then you can Plan and set goals like a maniac — only you’ll be dealing with reality — honestly.
Here’s how to make your 2008 much better than you might expect.
It’s hard enough out there without creating problems. Always — in the strictest sense of the word — establish a generous Sominex Account. I know I harp on this all the time, but not having massive cash reserves is foolish. As my clients will tell you, their eyes rolling, ‘yeah, we know, they call it risk capital for a reason’.
Why else would you have massively generous cash reserves?
And another year begins.
This entry was posted on Friday, January 4th, 2008 at 12:41 am and is filed under 1031 Exchanges, Real Estate Investing, Purposeful Planning, Real Estate Markets, Buying Income Property, Sominex Account, Market Correction. 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.