The Sky Is NOT Falling!

With all the hoopla about the economy, environment, politics and global unrest in general, it might be easy to get depressed. In fact, recent talks about GM considering a merger with Chrysler resulting in a number of plant closings and over 30,000 jobs lost – one might conclude that Armageddon and the end of the world must be just around the corner.

In fact, many people are pulling their money out of stocks, money markets, and even banks and putting their cash under their mattresses. Not a good idea! In fact, if you’re in the stock market and the value of your account seems to be down about 40% you should probably be doing two things. First, leave your money where it is!! It will come back. The number of shares you purchased is still the same and when the market rebounds, your balance will increase. Second, now is the time to be buying more shares and adding to your portfolio. Look at Warren Buffett, for example.

My friend Dennis, however, has been completely out of the stock market for the past three years. He cannot stomach the roller-coaster ride of the market. Can’t say that I blame him! He’s doing something else. And that’s OK! We all have our own approach to things in life. Be a leader, not a follower. Make your own rules rather than follow everyone else’s.

What is Dennis doing? He’s doing what many of us have chosen to do – invest in real estate! That’s right. Many of us have decided to put our money into something we can see and touch. Something we can analyze in terms we can understand. Everyone needs to live somewhere. Many people like the benefits of home ownership without the long-term commitment to a mortgage. So, these people are perfect candidates to rent a house.

I have been buying houses, fixing them up, and putting renters in them while I hold on and let the housing market recover. My tenants get the benefits of home ownership while I get the benefits of increasing home value (in terms of equity as the mortgage is paid down), tax deductions from my income (interest on the mortgage is tax deductible as well as all the maintenance costs, etc.), monthly income from rents that exceed all my expenses, … you get the idea. Ten years or more down the road, I will be sitting on tons of equity in the properties.

The problem all of us investors run into is the issue of money. There just is not enough of our own personal money to go around and buy up all the properties that are out there. Additionally, there is a limit to how many mortgages (currently it’s 4) any one person can have in their own name. So, the next level investors turn to is private money sources. There are some people out there who choose to invest their money in real estate rather than stocks but they have neither the time or desire to find, buy, fix, and manage properties for themselves. So what do they do? ……

These investors with money and no time or no desire to do the nitty-gritty, use people like me to help them with their investment goals. They basically serve as the bank and fund the investments with their own money while holding a first lien position. This is about as secure an investment there is!

If this sounds like something you would like to be involved in, contact me! I would love to work with you. The opportunities right now are almost unlimited!

The point is this. The sky is not falling. For some, times may seem unbearable difficult. But that is only because this change in circumstances has caught them unprepared! Don’t let this happen to you. Keep learning new skills, keep improving on your communication skills, keep building your network of friends and professional contacts. You never know when you will find yourself making a change. Be prepared. That is the lesson to be learned from today’s newspaper headlines.

Do not be afraid, just be prepared.