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. . . All over the world
Went “tag-surfing,” and discovered it’s a big, scary job world out there. At Mrs. Justa and Uncertain Tomorrows, the blogger’s recent encounters with unemployment concerns start old layoff memories from recessions past bouncing through her mind. Pennydog Jewelry, a self-employed craftswoman, is holding her own, but really working hard on selling in a recession. It’s on the news, in the papers, and constantly in conversations all around us, but the recession is also being quietly mulled over in our minds. Not just in the US, either! Simba Rulez writes about Gloom and Doom in Germany. We can’t get the recession and threats to our jobs off of our collective mind. Could all this resonating worry around the globe do something to pull us together? Can we solve this problem together? Someone else has been wondering something similar, a blogger named TheThirdDegree. Examining her own role in the financial crisis is java girl, who is managing to be thoughtful in the face of layoff concerns herself.
I heard on the news that the American economic disaster is also a disaster for other economies worldwide. We are linked more closely than ever, in our global economy. Interdependence – we share the troubles as well as commerce.
I was talking with another investor today, who questioned why I was trying hard to buy now, since it seems we’ll be in this recession for a while before prices start going back up. In part, I don’t think there’s a need to wait for “rock bottom” before buying. If I find a deal and it cash flows, that works for me. But the other part is, what if I get laid off? I’ll have to create a lot of cash flow to replace my income. Might as well get started now; either I’ll become financially independent, or I’ll become unemployed, and need to make my real estate pay me.
This started out being about taking back what the stock market took away, and bringing my dream of retirement back to the foreseeable future. Now it feels like it could be about survival.
But that’s exaggerating. I’m not in the position of someone who retired a few years ago and then lost 70% of their retirement savings. I’m one of the lucky ones. I have options besides making real estate investment work or keeping my job. Still, my worries are in tune with our collective global consciousness – people all over the world, worried about work.
Having done some investing in the past, being a small-time landlord, I had a little bit of know-how before wanting to take the Big Plunge. I’ve been wanting to take the Plunge for a few years now, to escape the 9-5 routine. Then, as you’ll know if you’ve been reading along, my dreams of early retirement evaporated in the 2008 stock market.
Now, the urge to ramp up to full time in real estate investment has been given a sudden boost: the prospect of losing my job.
Suddenly, learning to succeed in real estate is much more important!
I am 55, and although I landed this job over two years ago, I discovered in the process that being “overqualified” is one of the biggest hurdles to landing a job. (In my darker moments, I think of it as age discrimination.) Applying for over 6 months, I landed a total of two interviews, and one job offer. This one. To top it off, the other job interview was for a job in a city that’s 90 miles away.
I am fortunate, in that I can return to my previous business, and make a decent living. I’ve done it for years, and one can make a good living at it. Did I mention I’ve done it for years? I am not eager to go back to it. I find that I resist obligations to commit to tasks on exact times and dates, and my previous business is all about committing to exact times and dates. Have I become lazy? I just value taking my time, completing tasks when I am drawn to do so, putting my attention toward things that interest me that day, at that hour. Maybe it is laziness. Or selfishness. I value my free time, although I’m extremely busy in my free time! I like self-directed work much more than assignments, and self-imposed deadlines more than rigidly scheduled appointments.
And losing my present job?
I have had to lay off employees recently. The second round of budget cuts is upon us now, although my division will be spared because of the recent hit we took. However, the new budget for FY 2010 has appeared, and all are certain that the new cuts will reach us. We have already cut severely from our division. It’s hard for me to imagine more cuts that won’t include me, a layer of management. If I’m lucky, they’ll ask me to work part-time. Laid off completely will be unlucky, but it will certainly force me to go forward more assertively in real estate! In that way it could actually be lucky, too. I’m not sure what to hope for!
Was I naive, to discover seminars that cost $4995, and home study courses (self-published large notebook with print on one side of the page, 5 or 6 DVDs and 5 or 6 CDs, often both DVD and CD recordings of the same event) can run from a few hundred dollars to over $2000? After all (as they tell us), your first deal will more than pay for this! And here’s some advice for novices: “Invest in your education.”
I have had mixed experiences with these educational materials and events. On the one hand, you can learn and absorb material differently in a live event, or even those CDs and DVDs, than you can reading a book. For some, it’s simply better. On the other hand, the books can be much better organized and certainly better-edited (maybe, just “edited,” period!).
The mixed experience? These products are often pitched in a “Webinar,” or a guest speaker’s routine at a local real estate investment association. I heard one hour+ talk on a Webinar, by Peter Conti, that I thought was excellent. The material was clear, sound, and filled the session. Only in the last 5 or 10 minutes did he pitch his “course.” The rest of the webinar was informative and refreshingly free of comments like, “This is covered in more detail in the course.”
To my amazement, the course was almost the opposite. The DVDs and CDs were of the same event (a seminar, not the Webinar that I heard). The presenter was not using a PowerPoint, but overhead transparencies in a hotel meeting room. Filming and sound quality were poor. Worst of all, the course contained a whole lot of upselling of the presenter’s “boot camp” event. It seemed to me that I’d learned most of the useful material in the hour-long Webinar, which was free, and had spent $1200 on a course that covered the same ground, only not as well. I returned it.
I try to avoid these pitches because I am frightfully vulnerable to them. I actually own two different training courses on buying self-storage facilities! They are both excellent – one is by Scott Meyer, who specializes in this, and the other by Dave and Jeff Lindhal. The courses include lots of information – more than you could squeeze into a Webinar – as well as computer programs to analyze pricing of the properties, forms to use in the business, and more. Now if I can only choose between them!
I’ve been impressed with Dave Lindhal’s books, courses, and seminars altogether. I’ll be attending my first big “boot camp” in March – offered by Lindhal on finding private investors, syndication, and learning the SEC regulations. I’ll let you know how it goes! This organization has almost sold me on getting into the “coaching” program (for many thousands) but I have managed to resist it so far. Perhaps because I started allocating this money for buying real estate! Made an offer on a property Friday! Wish me luck.
If my jaded experiences with seminars has discouraged you, read below about learning this stuff from books. If you need hands-on learning, a job with a Property Management firm will teach you a LOT.
Do you have to go to expensive seminars or spend hundreds on “home study courses?” The advertising is very convincing! If you are new and not sure if this is for you, start by investing in some used books, from your local used bookstore, or paperbacks from the chain bookstore, or used books from Amazon.com. How do you sort the wheat from the chaff? There is a considerable amount of chaff in this genre! I started with the books of Gary Eldred, on the advice from people on the early retirement discussion forums associated with a fine retirement calculator, in addition to a great philosophy about early retirement. Eldred’s books are basic and quite helpful. Not quite for the beginner, but lacking completely in charm and chaff, are the books of John Reed (johntreed.com), who also has a lovely curmudgeonly “review” page, offering his opinions on many of the real estate “gurus” publishing today.
I think you can tell by the titles of many books whether they’re going to be useful or not. Unfortunately, though, some really good information can be found in books with lurid names! Confessions of a Real Estate Entrepreneur: What it Takes to Win in High-Stakes Commercial Real Estate by James Randel, is one such book. Nevertheless, the titles, as well as the cover designs, are usually good indicators. What’s your guess about Weekend Millionaire Mindset: How Ordinary People Can Achieve Extraordinary Success by Mike Summey and Roger Dawson, or Are You Dumb Enough to be Rich? by G. William Barnett II? If I decide I need to read one of this type of book, I try to leaf through it at the bookstore or find it used on Amazon.com. Many successful real estate investors swear by Kiosaki’s books (the Rich Dad, Poor Dad series) but they are not my style. Long on what you might call “philosophy” and very short on how-to details, I never found them very useful.
In contrast, I can wholeheartedly recommend Jeffrey Taylor’s The Landlord’s Survival Guide: How to Successfully Manage Rental Property as a New or Part-time Real Estate Investor, Leigh Robinson’s Landlording, Mike Butler’s Landlording on Autopilot: A Simple, No-Brainer System for Higher Profits and Fewer Headaches, and Nolo Press’s most recent edition of Every Landlord’s Legal Guide, which includes a CD with leases and other forms appropriate for each state! Recent useful purchases have included Thomas Lucier’s How to Make Money with Real Estate Options, David Lindhal’s Commercial Real Estate Investing 101: How Small Investors Can Get Started and Make it Big (part of the Trump University series). Very useful when you need to start understanding the math of investment: Frank Gallinelli’s Mastering Real Estate Investment. This book gives more examples and elaborates on the formulas in his earlier book, What Every Real Estate Investor Needs to Know about Cash Flow. . . and 36 Other Key Financial Measures. I recommend the second book; it’s less intimidating and more helpful to those of us for whom the last math course was many, many years ago!
Learning about market cycles, one of Lindahl’s areas of expertise, is covered well in Unlimited Real Estate Profits: Creating Wealth and Build a Financial Fortress with Today’s Real Estate Investing by Mark Stephan Garrison and Paula Tripp-Garrison. The title sounds a little over-the-top but the information is good.
I’m a reader, and reading lots of books about a subject makes me feel ready to step in to the process. Others learn better from listening to speakers and talking with more experienced investors. The place to do this is your local Real Estate Investment Association. There’s a directory here: REIA Directory on Bigger Pockets. Everyone interested in real estate investment should join the local REIA and attend regularly. Those connections, the network that you develop over time, forms one of the most important parts of your foundation as an investor.
Some other people’s lists of recommended real estate investment books: Recommended Real Estate Books, or Best Book Buys.
In another post I’ll discuss internet resources: the good, the bad, and the ugly!
There’s retirement advice everywhere. Since the baby boomers are coming of retirement age, retirement advice has proliferated and inhabits books, magazines, newspapers, the internet – oh, it’s all over the internet. The advice from all these sources have always required common sense and discernment. No change now, although it somehow seems that there’s an abundance of tired boilerplate, dire warnings, and get-rich-quick schemes alongside useful advice from sober, knowledgeable advisors.
Kiplingers, Smart Money, Money Magazine, books by Jane Bryant Quinn, Suze Orman, Dave Ramsey, David Bach, The Motley Fool, Choose to Save, and countless other sources offer direction. Even the government offers the standard “good” advice, at my money.gov . Why stray from the received wisdom? The advice that always made the most sense to me involved turning aside from attempts to time the market and pick stocks, using asset allocation with index funds, to remove emotion (and hubris) from investment choices. See these articles about asset allocation: The Index Investor,
Asset Allocation, and the SEC’s advice – Beginner’s Guide to Asset Allocation. Possibly the least sexy approach to investing for the future, it was apparent to me that the strongest approach was probably the one supported by research, not by fees that pay the salaries of stockbrokers or mutual fund directors. Using asset allocation and index funds meant that my money would grow roughly at the same pace as the overall market and the economy. Seemed like a pretty good plan until 2008.
As a homeowner, I couldn’t help but notice that one could really grow the nest egg by buying at the low ebb of the market and selling when it was back up. Or by buying a fixer-upper and investing some sweat equity into remodeling, landscaping, refinishing, and painting. Of course, if you sell your home at the top of the market, you’ll be buying another at similar high prices, unless you want to live in a tent until the next downturn. But what about real estate other than your own house? Wouldn’t this be an investment that offered a little more control, and used a little more of one’s own judgment, than tying your fortunes to the overall economy?
I bought my first investment property during one of the upswings in the market. It took 6 or 7 months to track down my little 2-family REO. (REO means Real Estate Owned, by the bank that foreclosed on it.) This particular REO had frozen pipes and boilers, asbestos, a tired roof, and an attic just crying out to become added bedrooms. It was an awful lot of work, and calling contractors, getting estimates, monitoring their work, advertising, screening tenants – I won’t do it again, but it was worth it. That house pays me a modest sum every month, unless both apartments should be empty at the same time. It’s a good investment. Not the most liquid of investments – I wouldn’t sell it now unless I had no choice – but a good place for money to be kept for the future.
The advice available to those of us who would like to invest in real estate is information hidden inside a jungle of hype, impressive salesmanship, expensive redundant “home study courses” and amazingly pricey “boot camps.” Books are better, but there are plenty of books with garish covers, incredible claims, and large type that have more in common with the snake oil courses than more useful sources of information.
How will the boomers figure out how to manage retirement planning now? There is still plenty of advice out there, even if you only count blogs! Consider this 82-blog catalog: http://www.blogcatalog.com/directory/investing/retirment
Retirement advice abounds, but things seem to have changed. What to do in these circumstances?
I’ve never supported selling one’s stocks and mutual funds when they go down. Ups and downs are part of investing, and the old saw, “Buy low, sell high” gives clear direction as to what to do when your equities drop. I’ve broken this long-held rule, though. If I wanted to buy stocks, this would be an excellent time to do so. But I want to buy real estate. It’s on sale, too!
I considered all of my other resources. My long-term, non-stock savings have been depleted by the incidental costs of college for my daughter. (Did you plan for more than tuition, room, board, and fees? Did you plan for out-of-plan physician visits? Travel to and from school? New computer? New cell phone when the old one was stolen at McDonald’s? Metro card? Parental restaurant meals and hotel rooms during the Arrival at College and the Leaving College for Home trips? Microwave for the dorm? Storage unit between semesters? I didn’t think so.) Your kid’s summer earnings would need to have been exceptional to cover it all. My kid worked 40 hours a week during her second semester, but there were still plenty of opportunities to spend down my savings.
How else could I fund new properties? I thought about an equity line of credit on one of my investment properties, but the amount of appreciation wouldn’t support a very big line. The soft real estate market doesn’t make this a very appealing time to sell, either. While I pondered, the stock market continued to drop, almost daily.
I decided that with both stocks and real estate severely depressed, I felt I could buy real estate cheap and so regain a little more control over my finances. And some day, some day, retire!
Please note, I’m not recommending this to anyone else. For one thing, I’m an experienced real estate investor. Well, a little bit, anyway. And another reason: I don’t know how it will turn out. Stay tuned!
We hear so much about what a mess real estate has become during the recession. And this is so, if you are losing your house to foreclosure, or even if your property values are dropping because your neighbors lost their houses to foreclosure. The increase in foreclosures is a sad testament to the greed of purveyors of sub-prime mortgages, and the ignorance of people who bought houses that their income could not support.
Is there a bright side to real estate in this recession? There is. If you don’t own a house but have some money saved up and a reliable income, now is the time to buy your house. Why? Real estate is on sale! In some areas it’s 25% off, and in some as much as 60% off! The cheaper house you buy may never soar to such an inflated price again, but you know that you are getting a very good price. Even if the market continues to drop, your chances of building equity in this house are excellent if you hold it, and live in it. If you’re trying to make a quick buck, then of course there is risk.
The silver lining to this terribly sad housing situation is buying real estate. If you are in a position to buy, you are in a position to get a very good price!
Real estate? In this recession? This blog is about selling in a hurry, buying a house on sale, watching property values, improving your home’s appearance. . . and, it is about thinking about, planning for, investing for, and worrying about retirement.
The best-laid plans of a hardworking mom. I saved money, have an IRA. Invested conservatively as I got older. I followed financial advice of experts.
So much of it is gone now, I can hardly remember those days of calculating and smiling. I was on track to retire, even early. Not any more, though – like you, and your friends and my friends and their friends. I grumble, but I can’t complain. I still have a job, though that’s not for sure in the future. I have plenty of years I can work ahead of me. And I’m certainly not broke.
Welcome to my blog. I’ll be musing about retirement, this recession, and investing in real estate. Comment freely, ask questions, bookmark, or wander off. Glad to have you if you stay and read!
