Thinking At 30,000 Feet High & 500 MPH
Posted @ 9:37 pm - Filed under 1031 Exchanges, Real Estate Investing, Retirement, San Diego Property Owners
Why is it one guy gets it and another doesn’t? In investment real estate there are things to do when certain factors are in play. When a different set of factors emerge, adjustments must be made. It’s just not that difficult. And yet…….
In 2003 it wasn’t hard to see the income property prices were rapidly heading towards that invisible line in the sand. You know the one. The price at which you can’t believe the seller thinks you’re that gullible. When they’re actually selling for that price, you need to get outa Dodge. Do you really have to be Einstein to read the writing on the wall? Of course not.
For those who either began investing out of (their) town, or owned locally for years, then finally exchanged their equity to where the grass was literally greener — have been rewarded. This is especially true if they moved their capital/equity out of San Diego.
If you’ve owned SD income property for a few years, and didn’t trade it into another growth region in the last few years, here’s what’s happened — or rather — what’s not happened since.
Let’s assume you’ve accumulated $500K in net equity, spread around 2-4 small residential income properties. If you had traded that equity into Boise in ‘04 or ‘05, you wouldn’t have stayed flat or gone down since. As a matter of fact that same $500K traded there two years ago would now be around $800-1.1Mil. And without breaking a sweat. That means if you still own those SD properties that’s literally how much you’ve left on the table while treading water. Keep in mind — treading water indefinitely isn’t an option in real life.
Finding your way to retirement is a journey — and treading water is not part of any journey — at least not for long.
The question becomes — how long can you tread water before you decide you’d like to get back on the road to a magnificent retirement?
And yet folks still wonder if getting out of SD or any place like it, is a sound strategy. If I gave you the choice of a $5 bill or a $10 bill, which would you take? I’ll assume you said the later. Yet you still insist on treading water in San Diego, a market that will never perform the way it has the last four decades — never. It can’t.
Why?
Because as I started out saying, the prices have reached that point where that line has been drawn in the sand. Once that happens, there’s no going back. The sooner you realize it the sooner you stop losing the hundreds of thousands of dollars you’ve already lost. Your decision to wait and see, means just that. You’ll wait, while seeing others making the money you’re not.
I’m thinking about this while flying to Chicago for a conference. While looking out the window over middle America, and seeing the millions of acres of farm land and small towns pass below, I can’t help but wonder about their retirement. In the last several weeks I’ve spoken with so many investors living in the far less populated, slower moving regions of the country. They get excited when they hear how they can, by making just a couple minor adjustments, secure a magnificent retirement income.
Yet my clients in the bigger cities of San Diego, Orange County, Phoenix, L.A., and Denver — sometimes don’t get it like the small town people seem to. Don’t get me wrong, they do the right things, take advantage of new areas, and generally pull the right triggers. But the investors and would be investors in places like Fargo, North Dakota or Rexburg, Idaho and places like them, seem to plug in. They’re so many times categorized as not in the know, or too old school, when in reality neither are necessarily true.
It’s just that they’ve not been told where the bodies are buried before. Once they begin to figure out which way is north on the map they tend to follow the path their plan takes them. I like these folks a lot. They’re excited someone is telling them what they always knew existed, but couldn’t quite find.
This excites me no end. I’ll bet in the last month or so I’ve heard this comment more than in the last couple years. “We’ve been wanting to invest in real estate for quite awhile now, but never knew anyone who’d really take the bull by the horns and tell us what to do, instead of asking us to tell him what to do. You’re that guy — what do we do to get started?”
The reason I am a real estate investment broker is because from time to time I get hear that comment directed my way. It just doesn’t get any better than that.
Life is good.
This entry was posted on Friday, May 11th, 2007 at 9:37 pm and is filed under 1031 Exchanges, Real Estate Investing, Retirement, San Diego Property Owners. 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.
