ANOTHER PERFECT STORM
During my 45 years investing, I’ve struggled through 4 economic downturns at various hurricane levels, but this one is shaping up to be the best ever! Up till now, the Jimmy Carter presidency has always been my all-time favorite because Jimmy and his crew made me a $1,000,000 overnight. When folks ask me exactly how he did it, I’m still a bit in awe, but what I can tell you - having my name on the deeds to a bunch of duplexes was pretty much all I had to do. Jimmy’s runaway inflation did the rest. My property values doubled in hardly. no time at all.
WILL HISTORY REPEAT ITSELF?
Home sales have slowed to a trickle where I live. My state (California) has risen to the leader in foreclosures! Bankers are scratching their heads wondering why they wrote so many “liar loans” (no docs) for deadbeats and of course by now, everyone knows lenders Freddie Mac and half sister Fannie Mae are in the “dumper”. Meanwhile, the Wall Street bunch is mopping around totally baffled. They thought the problem was four-dollar gas.
Once again, the inflation sharks are circling faster than anytime since 1981. New construction (home building) is at a 17 year low and mortgage defaults are growing by the day. Of course, there’s some bad news too! Interest rates are still comparatively low – which means Jimmy’s record remains unbeaten for now – still, we’re hearing awful bad vibes on the street. The unemployment fund is nearly broke, major retailers are filing bankruptcies and there’s big problems still ahead for oil. When the interest rates finally bust loose – you can kiss 01′ Jimmy’s record goodbye!
WHAT’S A POOR INVESTOR TO DO, YOU ASK?
My quick answer is get yourself in position to become rich! After all, how many Jimmy Carter’s are out there? You can’t expect them to help you all the time! If you miss the boat this time, you’ve got no one but yourself to blame. You can’t get rich sittin’ at the intersection when the light turns green! This get rich formula hasn’t changed in over a hundred years. You must acquire income-producing (assets) real estate before the inflation dam bursts. You must have the vision to see the leaks now, and be prepared to act quickly!
It’s important that you seek out and acquire the kind of properties that will rise with the tide! If you’ll purchase investment properties that are already earning income today; they’ll automatically rise with inflation- quite similar to a toilet after you flush! The added value (appreciation) which accompanies inflation is the easiest money you’ll ever earn and it’s all tax-free when you keep the property. Imagine if you can, acquiring an income property where inflation automatically drives up the value and the income, while your mortgage payments stay the same. That’s exactly what Jimmy’s term in the White House did for me. It was the perfect storm then – and it’s about to make an encore.
7 Responses to “ANOTHER PERFECT STORM”
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good morning Jay, once again an exellent discussion. Maybe a couple of ?s, you seem to be crediting jimmy w/ the enviorment that was conducive for the results experenced (as you put it) by savey investors who were paying attention. I was out of the loop during that time and am not making any claims to being in the loop now, but I am certianly in a much better position at this time than I have ever been in my life to seize the opportunities coming, ( w/ much credit going to our own personal mentor and hero” FIXER JAY” ) Thank you sir. My question now is where does the credit belong for what we are seeing at this time. I think you will agree that possibly in our life time (and maybe never) there has never been so many contributing factors, as well as diverse contributers. Don’t missunderstand my question here, I am not trying to make a political pitch, on the contrary, I am simply picking your resourses for as clear a picture as possible. With my learning disability I have to move as far away from asumption as possible, after all you have taught us well whose responsible for the decisions we make and even slow learners have some life lessions to draw on. Again Jay, thank you for being who you claim to be. You really haven’t always lived in california have you? Gerald
Hi Gerald: Yes, I’ve been a California investor my entire career. The credit for current situation is mainly caused by “the want everything now generation”.
Using home equity loans for toys, cruises, new pickups – meaning bigger payments with no additional income! When rought times come, families have no reserves to fall back on. Also, relaxing credit rules has hurt everyone. For conservative folks, it’s Christmas time!
Fixer Jay
Bob,
If inflation does cut loose and sends interest rates into double digit numbers like in 1981,…are you advising your disciples to sell their gooses that lay the golden eggs each month OR just hold on to them. If your money making single family house, duplex etc. doubles in value overnight, do you sell and run with the loot OR continue to hold them for monthly cash flow.
This “recession” our country is experiencing is making me nervous as an investor. I plan to sit on the fence for awhile before buying another fixer-upper.
Roy in Alabama
Roy – I know I’ve taught you better than your comments! Otherwise, I’ll need to bring you back out to California for a Fixer Camp repeat and hammer on you some more!
Your properties are pumping out cash flow. Don’t sell them till you’re all done investing – then if you wish, sell and carry paper. Sounds fine.
Recessions don’t mean squat in our business. We rent affordable houses. We always have paying customers and by the looks of things more are comin’. Don’t slow down, the deals just get better OUR WAY.
FIXER JAY
Bob,
My apologies for the tone of my previous post. Out of 7 tenants, I have 2 slow-paying deadbeats that are testing my resolve and patience to be a landlord. It was my fault in renting to them in the first place and now I am paying the price of admission of landlording.
Yes, I could probably use another Fixer Camp to
re-charge my batteries which are running on low right now. I will get through this.
Thanks for your advice and coaching.
Roy
hello Roy, Gerald here. Whose Bob ? Just wonderin. Thanks
Gerald,
Bob is fixer-jay’s nickname and the name some of his tenants call him.
Roy