Category: Retirement (page 2 of 2)

by Jeff Brown

Real Estate Investments Broker

Author website

So much of the country hasn’t experienced the 15-40% annual appreciation rates places like San Diego have experienced several times. Regardless of the down times, we’ve learned she always comes back smiling. The market? In the end, she would always love us. She always has. Though at times she could lash out, she always made up for it with lavish gifts of abundant appreciation. That may still be the case in regions like SoCal, but it’s my belief it won’t include the vast majority of residential income property.

There are several reasons allowing investors to conclude this. I wrote about many of those reasons in over at my place, adding a video for fun.

First and foremost, developers paid attention in eighth grade math class. They can make $X building duplexes or fourplexes and the like OR $X+ building condos/townhomes OR $X+++ building single family residences — and all on the same piece of dirt. Go figure, they chose to build where they found the most profit. This has been happening in places like San Diego since the ’80’s.

The only residential income product built since then has been recently. It’s been concentrated on the coast and upper income locations with rents that are incredibly high. These newish projects are not competition, nor do they have any positive affect on the values, rents, or vacancy rates of 35 year old duplexes. Duh.

An example is a new place offering 1 bedroom apartments for twice the rent of competition half a mile away. Twice as much. They also offer their tenants everything but a Friday night date — something I’m sure they’ll correct upon reading this.

The point is that the market? She’s left you. And she ain’t coming back no matter how much you turn on the old charm. When investors have the choice of putting less than 35-50% down just to break even, they’ll do it. The party’s over. Capital flows to the best returns. Duh. So why do folks in places like uh, the west coast for instance, insist things will revert to the status quo they’ve relied upon for so Read more

by Jeff Brown

Real Estate Investments Broker

Author website

Dear Real Estate Investor:

Times are tough. Did you think sooner or later they wouldn’t be? Is that why you’re spinning yer wheels searching for the perfect property in the A+ location, priced under the market?

Are ya leaving milk and cookies on the table for Santa next Monday too?

Take a minute and breathe deeply the gathering… Oops, sorry, had a 70’s flashback. Let’s start again.

We’ve all seen investors who’ve been fairly successful. Ever found one with a portfolio acquired only in boom times? Silly question isn’t it? When did they buy, making their biggest long term hits? Wait for it — here it comes — in the down times.

Next, ask them how many perfect properties they own in the best locations possible. The answer to that question, after they stop chuckling, is a big fat zero, zip, nada.

Besides, if you actually found that property, you couldn’t afford it anyway. 🙂

Invest in properties in solid growth areas, where jobs are plentiful and the other fundamentals are in place and for real. Buy them when the times are tough — hey! that’s now. Make sure you can use reasonable leverage with old fashioned loans. Demand they break even or better before tax, and cash flow easily after tax.

Don’t insist on staying local, as your market probably sucks more than a new Dyson. You already know that though, right? So what’s the problem? You think you’re better off being able to drive by your property? Do you wanna drive by mediocre or occasionally fly to excellent and stellar? Is the decision really that difficult?

If this doesn’t come across as written by Captain Obvious — read it again. The differences between highly successful real estate investors and the rest of the crowd makes for a long list. The two biggest differences providing the most profitable impact?

Successful investors don’t need perfect properties — and they buy in buyers’ markets whenever possible, as much as possible.

This isn’t from the third tablet Moses lost on the way down the mountain that day so long ago. Buying in a buyers’ market isn’t a genius Read more

by Jeff Brown

Real Estate Investments Broker

Author website

Dad, when he was poor, survived on peanut butter and onion sandwiches — no lie, as I couldn’t make that up. 🙂

Though not nearly as weird, I like spinach salads with olive oil and malt vinegar. I’ve not run into anyone else who likes it. They usually put balsamic vinegar on instead. Go figure. 🙂

I love garlic in my stir fry, onions too. The malt vinegar on my spinach salads might be a little quirky, but not up to the level of garlic on ice cream, know what I mean, Verne? Not even if it was free. 🙂

The same goes with cash flow. It goes well with retirement. In fact, surveys show it’s #1 on retirees’ wish list — more of it, that is. 🙂

You’re invited to my place, for a short weekend read on the subject of how cash flow can actually significantly reduce your ultimate retirement income.

The misuse, or rather, poorly timed pursuit of cash flow is maybe the most misunderstood factor in real estate investing.

While you’re there, try listening to a podcast or two. By far, the two most popular are Purposeful Planning and Grandpa Economics.

Enjoy your weekend.

by Jeff Brown

Real Estate Investments Broker

Author website

In the seminars we’ve been conducting in San Diego and out of state, we’ve been noticing a common denominator that is becoming more and more troublesome to us. It’s the number of stories being told of parents, grandparents, or the storytellers themselves.

It often begins with, “My dad is in his 70’s, healthy, and owns his home free and clear. He has Social Security, a small annuity, plus the income from his life savings. It all adds up to around $35,000 a year or so. His retirement years aren’t anything like he planned — and he’s becoming more disillusioned each year.”

That’s sad enough on its own merit. How would you like to live your so called Golden Years pinching pennies in a 50+ year old house, and enough after tax income to survive? Now imagine what his kids must think as they begin to enter their 50’s. “Is that my future? Why bother?”

Why bother indeed. Let’s crank up the way-back machine, and see if we can’t shed some light on Dad’s thinking when he was in his 20’s and 30’s.

Let’s say he was 25 in 1957. What if…..

What if we found Dad in ’57 and gave him a choice. He could work hard, invest in real estate, make some sacrifices early in life, and end up with a pretty nice retirement. His other choice would be in the form of a guarantee. How about we guarantee him a $35,000 annual income AND a free and clear home? The median income back then was no doubt less than $10,000 a year. I’ll bet he’d have taken the guarantee. To him it would have been a no-brainer. Yet folks who today find themselves in that exact position are leading lives far different than they ever envisioned.

True Story

I was talking with a prospect the other day, who lives in another state. His parents live in an adjoining state, are retired, and in their 70’s. They enjoy very good health, and are able physically to travel. They are living the very life described above — an old free and clear home, with a little less Read more