Take the guy who drives like a maniac and cuts you off and then gives you the finger for driving too slow.
Or what about the person that gets back the wrong amount of change from a clerk at a store or fast food place? You know, they gave the clerk a $10 bill and the clerk gives back $15 in change or something like that, then instead of correcting the mistake, they keep the money and call the clerk stupid when they get out of the store. Further, they are proud they got the money. Is this wrong?
Today I went to see a young man have his first amateur fight as a boxer. I know him and his father from my working out at Wild Card Gym in Hollywood. I had a mid-life crisis, joined the gym and fell in love with the sport.
I went to East L.A. to a little boxing gym named "Eddie Heredia's" to watch Terry Bodine have his first fight. He won by TKO in the first round and it was very impressive. He was beyond joyful as he leaped up on the ropes with fists extended in victory. I was so happy for him.
What really moved me was that prior to all the fights taking place, the announcer (former Gold Medalist Paul Gonzalez) asked everyone to rise and sing the national anthem!
Granted, the guy could not sing, but every one of the 100+ people rose and sang with passion and respect. The day was about young men competing and playing by the rules and appreciating what they have. I was impressed with the entire afternoon and all of the participants. I have been boxing now for 3 years and am still learning the discipline of what it takes to get in that ring!
Over the past few years a select group of Savoy investors decided to take advantage of the economic turmoil and go into strategic default. My definition of a strategic default is the deliberate act to defraud a lender. Now why would anyone want to defraud a lender with laws that if proven, could include jail time? The simple answer is greed.
In the commercial/industrial real estate world, this is happening on a small basis. But it is rampant in residential real estate, where up to 30% of all homes in default are strategic. The purpose of a borrower and Savoy investor to enter into the world of strategic default is to renegotiate the current loan to a lower rate, possibly a reduced principal adjustment, or break an onerous loan and refinance without penalties. Another more personal reason would be to show weakness in equity to get out of a costly divorce or other personal gain.
Now I’m not giving legal or marriage advice here, so keep cool. I’m also not suggesting that you as a property owner, home owner or interested party enter into the strategic default game, as you could get stung!
Another game the really creative defaulter will do is to enter into strategic bankruptcy in order to wipe out the creditors and reset their financial position. This can buy time while the owner continues to draw income from property, while not paying the mortgage. Again, I am not suggesting that you stop paying your bills and go bankrupt.
There is a single asset for real estate bankruptcy that has many pitfalls and the lenders can be tough on those types of borrowers that try to delay a foreclosure. Bankruptcy is supposed to entail filing a plan to reorganize and turn a profit at some future date. If the property is owner occupied, what is going to be the difference with a bankruptcy? Probably nothing, and the judge is going to void the asset from the bankruptcy.
There are some expert Bankruptcy Attorney's that can guide you through the maze should you need to consider delaying a foreclosure and reorganizing your portfolio. Here are a couple of reputable attorneys that I know: Sara Chenetz: 424-239-3464; and David Kupetz: 213-626-2311.
So, is a strategic defaulter a bad person doing good, using all the laws at their disposal to improve the bottom line? How do you feel about a person or company that uses default as a tool to get out of paying their bills? What if they are really wealthy and are just using a tool to defraud the banks?
I’ll let you decide.
Friday, March 16, 2012
Friday, February 17, 2012
Horse Racing & Real Estate
When I was 8 years old, my dad, my uncle Sam and cousin Howard took me to the race track at Hollywood Park. It was an amazing day for us as we won and won big. I will never forget that they asked me who to bet on. The first horse I ever picked was Celestial Pride, and he won at odds of 15-1! Just to prove to everyone that I was an amazing handicapper, I chose Pink Dust at 45-1 for the next race and he went on to win too! Needless to say, I was hooked. I think if I could drive they would have bought me a new Cadillac.
Over the following years, I become a big fan of horse racing. At Hollywood Park I saw Seattle Slew get beat by Bill Shoemaker riding a small horse named Kennedy Road. At Santa Anita, I watched the greatest horse of our lifetime, John Henry, take on all challengers and win at the ripe old age of 9. That's like Magic Johnson playing basketball at 80!
Who can forget Cigar and Zenyatta! There are so many wonderful memories. These horses had courage and the hearts of a champion. It was a joy to watch them compete. I had the opportunity to meet Joe Masino of Class Racing Stable 12 years ago. He got me interested in becoming a horse owner, so I bought a 25% interest in a race horse. We bought the horse, Monterey Jazz, as a 2 year old from the breeder for $85,000.
Monterey Jazz was a big boy. He did not start out too well. He lost most of his races at 2 and 3 years old. Then something happened. He ran on grass and found a new home. Monterey Jazz won a claiming race going away at Hollywood Park, and thank god no one claimed him. In a claiming race, anyone can buy your horse. Next he ran in a stakes race at Santa Anita called the Sir Beaufort. He won a close race. Next was the race of his career: he ran in the Strub Stakes, named after the founder of the Santa Anita Racetrack. Monterey Jazz won by 8 lengths in 1:45:20, the fastest time in the Strub Stakes in the 1-1/8 mile race.
Jazz had a minor setback in his next race, the Million Dollar Santa Anita Handicap. He went off as the big favorite with a field of 12 horses. The track had been slowed with rain. Jazz, in his typical style, went out in front but went way too fast and the slow surface wore him down. He finished last.
We then put him on a plane and took him to Dallas Texas and Lone Star Park to run in the Texas Mile on the dirt. Jazz and jockey David Flores went out in front and never looked back. He won by 8 lengths without really breaking a sweat. Monterey Jazz would go on in his career to win the American Handicap with the blistering time on the 1-1/8 mile turf of 1:45:3, the fastest of that race. He would wind up running a track record and still holds that record for a mile on the turf at 1:32:2.
Just as sometimes happens in real estate partnerships, we sold Monterey Jazz this week. He will now be running in the southwestern U.S. with new management and ownership. He wound up winning almost $1 Million in purses for our group. I met many great people during my time with horse racing. Many people involved in the real estate business buy horses as a tax shelter for their passive income. You can deduct 50% of the cost of a race horse the first year (consult your tax advisor or check out Joe at www.classracingstable.com).
This year our brokerage business has started out with a bang. We have multiple deals going into escrow and we are getting multiple offers on properties. The action is hot and heavy. SBA loans today are 4-4.5% with 25 year amortization. Not a bad deal. That is very cheap money.
We are listing many apartments, foreclosure properties, Downtown Los Angeles development properties and warehouse facilities, either for sale or lease. I predict that 2012 is going to be a big year for Los Angeles commercial, industrial and multi-family real estate.
Over the following years, I become a big fan of horse racing. At Hollywood Park I saw Seattle Slew get beat by Bill Shoemaker riding a small horse named Kennedy Road. At Santa Anita, I watched the greatest horse of our lifetime, John Henry, take on all challengers and win at the ripe old age of 9. That's like Magic Johnson playing basketball at 80!
Who can forget Cigar and Zenyatta! There are so many wonderful memories. These horses had courage and the hearts of a champion. It was a joy to watch them compete. I had the opportunity to meet Joe Masino of Class Racing Stable 12 years ago. He got me interested in becoming a horse owner, so I bought a 25% interest in a race horse. We bought the horse, Monterey Jazz, as a 2 year old from the breeder for $85,000.
Monterey Jazz was a big boy. He did not start out too well. He lost most of his races at 2 and 3 years old. Then something happened. He ran on grass and found a new home. Monterey Jazz won a claiming race going away at Hollywood Park, and thank god no one claimed him. In a claiming race, anyone can buy your horse. Next he ran in a stakes race at Santa Anita called the Sir Beaufort. He won a close race. Next was the race of his career: he ran in the Strub Stakes, named after the founder of the Santa Anita Racetrack. Monterey Jazz won by 8 lengths in 1:45:20, the fastest time in the Strub Stakes in the 1-1/8 mile race.
Jazz had a minor setback in his next race, the Million Dollar Santa Anita Handicap. He went off as the big favorite with a field of 12 horses. The track had been slowed with rain. Jazz, in his typical style, went out in front but went way too fast and the slow surface wore him down. He finished last.
We then put him on a plane and took him to Dallas Texas and Lone Star Park to run in the Texas Mile on the dirt. Jazz and jockey David Flores went out in front and never looked back. He won by 8 lengths without really breaking a sweat. Monterey Jazz would go on in his career to win the American Handicap with the blistering time on the 1-1/8 mile turf of 1:45:3, the fastest of that race. He would wind up running a track record and still holds that record for a mile on the turf at 1:32:2.
Just as sometimes happens in real estate partnerships, we sold Monterey Jazz this week. He will now be running in the southwestern U.S. with new management and ownership. He wound up winning almost $1 Million in purses for our group. I met many great people during my time with horse racing. Many people involved in the real estate business buy horses as a tax shelter for their passive income. You can deduct 50% of the cost of a race horse the first year (consult your tax advisor or check out Joe at www.classracingstable.com).
This year our brokerage business has started out with a bang. We have multiple deals going into escrow and we are getting multiple offers on properties. The action is hot and heavy. SBA loans today are 4-4.5% with 25 year amortization. Not a bad deal. That is very cheap money.
We are listing many apartments, foreclosure properties, Downtown Los Angeles development properties and warehouse facilities, either for sale or lease. I predict that 2012 is going to be a big year for Los Angeles commercial, industrial and multi-family real estate.
Tuesday, January 3, 2012
Deal Over a Meal
During the year-end holidays, all I can think about is food. So I was thinking about some of my favorite places around Los Angeles that I love to eat at. If you are involved in real estate, you know that many deals have been made over a meal. It seems that it is a tradition to do business over a breakfast, lunch, and sometimes even dinner. Sitting at a table and breaking bread seems to make a deal feel better.
Back in the early 1990's, my brother Jeff and I were selling the old Orbach's Department store (an RTC property) to our old client Mehdi Bolour. We had our offer accepted at $10.5M and delivered a signed agreement with a $500,000 non-refundable deposit. Our client invited us to lunch at the Pacific Dining Car to tell us that he as the buyer and payer of our commission was going to cut us from 4% to 3%. This was the first hundred thousand dollar lunch I ever had. The worst part was I paid for the lunch too! The Dining Car serves great steaks by the way, but I love their eggs benedict for breakfast… the BEST.
The rest of the story is also eye-opening: the RTC had the right to reopen the bids. So we were kicked out of escrow and had to rebid. We had leases ready to go with a health club for the basement, a supermarket for the ground floor and a clothing retailer for the second floor. This was a “home run” deal. Our client was willing to bid $14M and would still come out okay.
Well, greed got the better of him and he only bid $10.9M. Cedars Sinai Hospital bid $11M and the State of California and Petersen Automotive Museum bid $11.1M. I guess you can tell who had the inside info? Not us.
Needless to say, I have mixed emotions whenever I go to any event at the Peterson.
Breakfast can be hard to do well, and as I said, the best place for breakfast is the Dining Car in Downtown LA. It’s open 24 hours and the one in Santa Monica is good too. For really good pancakes you have Jacks N Joe and of course the Pantry. The Pantry has the absolute best coffee. When I was a kid my dad took me to Vickman's, where I also went when I first started working Downtown. That was the place to go to see all of the Produce District people and other manufacturers.
At Vickman's, I met many of my clients that I still have relationships with 26 years later. I met Harry Lumer of Joe's Parking there and became their broker for many years. At the time they were the largest owner of land in Downtown. I continue to do business with the Fleischman family, who had one of the biggest janitorial supply companies prior to the Home Depot age. The business is long gone and father Art has passed, but the son still manages their real estate holdings in the Arts District.
The art of meeting people might be lost on most of the population, but having a sit down meeting is still the best way to do business. Seeing someone's reaction to the discussion back and forth is more telling than an email. So I still like to meet over food.
The best Chinese food in Los Angeles is Yang Chow on Broadway in Chinatown. The Slippery Shrimp is to die for, but if you need to be authentic, then a short 15 minute drive to the famous 888 in Monterey Park is great too.
Being Jewish, deli's are a big part of the food thing. I like most of them, but here are a few of my favorites:
1. Canters: simply the best chopped liver, potato salad and an amazing barley bean soup.
2. Izzy's at 15th & Wilshire in Santa Monica has the best kishka.
3. Langer's on Alvarado St. has the best pastrami sandwich.
4. Jerry's: chicken soup = YUM!
5. Philippe the Original is not a deli per say, but it’s still fantastic for a French dip sandwich. Here’s a tip: the lamb is heaven in a double dip roll.
A little dive that is also amazing is El Colmao on Pico Blvd near Vermont Ave. Now if you’re not a city guy, it can be a little scary in the parking lot, but this Cuban restaurant is golden. If you like Versailles or just Cuban food in general, get here fast.
Another sleeper that has been a Los Angeles staple is Harold and Belle’s, which was recently in the paper because the ownership got a free loan from the city. They serve the most amazing Creole food. The Chicken Creole and the giant lobster tail is the best.
Other great Downtown places are the Palm, Roys, the Farm, Bottega Louie, and Freebirds World Burrito at Figueroa and Jefferson by USC.
If you like quality wine, another secret gem is the San Antonio Winery. Nestled in northeast Downtown, this oasis winery also has very good food (cafeteria style) and is perfect for a long lunch. The wine is top tier.
A great place to eat Mexican food is in East Los Angeles at El Tepeyac Café. The food is very tasty, not spicy, and they serve huge portions. This place is a deal closer.
If you want Italian, the best spaghetti in America is Andre’s at 3rd and Fairfax. It has been simply the best for decades.
For the more dressy fancy dinner meetings I like Morton’s, but then I might venture to Beverly Hills and do the old fashioned Spago. It is a wonderful dining experience and a place to be seen. My favorite restaurant for beef is Lawry’s the Prime Rib on La Cienega Blvd, home of the “Beef Bowl” competition between the two Rose Bowl teams.
I look forward with optimism and hunger to a fantastic 2012!
Back in the early 1990's, my brother Jeff and I were selling the old Orbach's Department store (an RTC property) to our old client Mehdi Bolour. We had our offer accepted at $10.5M and delivered a signed agreement with a $500,000 non-refundable deposit. Our client invited us to lunch at the Pacific Dining Car to tell us that he as the buyer and payer of our commission was going to cut us from 4% to 3%. This was the first hundred thousand dollar lunch I ever had. The worst part was I paid for the lunch too! The Dining Car serves great steaks by the way, but I love their eggs benedict for breakfast… the BEST.
The rest of the story is also eye-opening: the RTC had the right to reopen the bids. So we were kicked out of escrow and had to rebid. We had leases ready to go with a health club for the basement, a supermarket for the ground floor and a clothing retailer for the second floor. This was a “home run” deal. Our client was willing to bid $14M and would still come out okay.
Well, greed got the better of him and he only bid $10.9M. Cedars Sinai Hospital bid $11M and the State of California and Petersen Automotive Museum bid $11.1M. I guess you can tell who had the inside info? Not us.
Needless to say, I have mixed emotions whenever I go to any event at the Peterson.
Breakfast can be hard to do well, and as I said, the best place for breakfast is the Dining Car in Downtown LA. It’s open 24 hours and the one in Santa Monica is good too. For really good pancakes you have Jacks N Joe and of course the Pantry. The Pantry has the absolute best coffee. When I was a kid my dad took me to Vickman's, where I also went when I first started working Downtown. That was the place to go to see all of the Produce District people and other manufacturers.
At Vickman's, I met many of my clients that I still have relationships with 26 years later. I met Harry Lumer of Joe's Parking there and became their broker for many years. At the time they were the largest owner of land in Downtown. I continue to do business with the Fleischman family, who had one of the biggest janitorial supply companies prior to the Home Depot age. The business is long gone and father Art has passed, but the son still manages their real estate holdings in the Arts District.
The art of meeting people might be lost on most of the population, but having a sit down meeting is still the best way to do business. Seeing someone's reaction to the discussion back and forth is more telling than an email. So I still like to meet over food.
The best Chinese food in Los Angeles is Yang Chow on Broadway in Chinatown. The Slippery Shrimp is to die for, but if you need to be authentic, then a short 15 minute drive to the famous 888 in Monterey Park is great too.
Being Jewish, deli's are a big part of the food thing. I like most of them, but here are a few of my favorites:
1. Canters: simply the best chopped liver, potato salad and an amazing barley bean soup.
2. Izzy's at 15th & Wilshire in Santa Monica has the best kishka.
3. Langer's on Alvarado St. has the best pastrami sandwich.
4. Jerry's: chicken soup = YUM!
5. Philippe the Original is not a deli per say, but it’s still fantastic for a French dip sandwich. Here’s a tip: the lamb is heaven in a double dip roll.
A little dive that is also amazing is El Colmao on Pico Blvd near Vermont Ave. Now if you’re not a city guy, it can be a little scary in the parking lot, but this Cuban restaurant is golden. If you like Versailles or just Cuban food in general, get here fast.
Another sleeper that has been a Los Angeles staple is Harold and Belle’s, which was recently in the paper because the ownership got a free loan from the city. They serve the most amazing Creole food. The Chicken Creole and the giant lobster tail is the best.
Other great Downtown places are the Palm, Roys, the Farm, Bottega Louie, and Freebirds World Burrito at Figueroa and Jefferson by USC.
If you like quality wine, another secret gem is the San Antonio Winery. Nestled in northeast Downtown, this oasis winery also has very good food (cafeteria style) and is perfect for a long lunch. The wine is top tier.
A great place to eat Mexican food is in East Los Angeles at El Tepeyac Café. The food is very tasty, not spicy, and they serve huge portions. This place is a deal closer.
If you want Italian, the best spaghetti in America is Andre’s at 3rd and Fairfax. It has been simply the best for decades.
For the more dressy fancy dinner meetings I like Morton’s, but then I might venture to Beverly Hills and do the old fashioned Spago. It is a wonderful dining experience and a place to be seen. My favorite restaurant for beef is Lawry’s the Prime Rib on La Cienega Blvd, home of the “Beef Bowl” competition between the two Rose Bowl teams.
I look forward with optimism and hunger to a fantastic 2012!
Thursday, December 15, 2011
A Look Back at 2011
As another year comes to a close and we look back at 2011, it ends with more questions than answers for all financial markets, including real estate. Back in the 1980's, when the stock market was tumbling, I remember driving to work and seeing that the stores on Olympic Blvd. were all open and things were operating as usual.
However, why does this current downturn feel more like a pending calamity that will have no end, no silver lining and no way out?
I think that instant communication has created a panic society that is reactionary. What do I mean? As news travels at the speed of light over the internet, the general public as well as investors and large money fund managers react to news, rather than take the time to consider what it really means.
Watching Jim Cramer’s stock market analysis for 15 minutes each morning before I go to my workout is a prime example of panic and reaction, and the lack of any credibility of our news and its analysis of why things happen.
For the past months, Greece’s debt and bailouts were the reason that stocks climbed, but recently the market dropped 400 points with the Italian debt crisis as the hot topic. These are distractions that go along with the Penn State crisis, housing numbers, unemployment and the stateside visit of Prince William.
Now for the majority of Americans, this is a frightening reality. Low interest rates are affecting most older retirees as they have a fixed income that is being absorbed as the equity is being used. Market interest rates should be at 7%+ and prime rates should be there as well. But, we are in a time when “too big to fail” economics prevail and the average American is up the creek without a paddle. Medical costs are a disaster and again, the average American is in the difficult position of deciding between food, shelter or medical needs.
This is a real problem that requires hard answers if it is going to be solved. As I watch the republican presidential debates, I see that we are in worse trouble than I could imagine. Which one of these people could I trust to actually do anything, and which could captivate our country and world to make a real impact? I think Newt Gingrich may have a chance, but we’ll see. The other guy is Ron Paul, who is a genius in economics, but the media makes him out to be a nut.
So we have very few choices and they are not too good. This is why people are marching in the streets and this is why so many people I talk to are somewhat depressed. The media is feeding on any bit of tabloid crap they can report, and sensationalizing everything with a negative spin.
Fortunately, when I get in my car and drive to work, I pass millions if not hundreds of millions of dollars worth or real estate. Bernie Madoff can't hide that on a balance sheet, nor can the hedge fund managers pick it up and move it while we sleep. I can rest easy that if I have a good tenant and low debt, and manage my affairs properly, I will be safe from harm’s way. Real estate in Los Angeles is the single safest investment you can make.
We have a few earthquakes, but for the most part, very little property damage when they occur. The risk comes with not being educated and just buying something you do not understand. I can say that although I have been in real estate for over 25 years, I don't understand the office market. When I have that type of request, I usually refer it out to someone with more expertise. I think I understand retail and am an expert in industrial property, so I look for opportunities in those markets.
My goals for 2012 are the following:
1. Buy more industrial buildings in Los Angeles
2. Buy properties that are adjacent to my existing holdings when possible.
3. Grow my brokerage business by continuing to provide honest market insight for my clients.
Every generation has been faced with challenges that cause the majority to sit and wonder what will happen, while the few build their wealth, holdings and real estate portfolios. They buy first notes, invest in notes, buy buildings and reposition them with different uses and tenants. They are conservative yet aggressive. These syndicates, individuals, families and corporations have a business plan and stick to it.
As we are exposed to uneducated and over-educated reporters and experts who tell us what we should think, it is easy to be distracted from your goals. It is easy to be frightened into inaction. The time to buy is when everyone else is selling, when most are frozen and panicking.
As I see the growth in the companies that have planned well and survived the downturn, I see light at the end of the tunnel. I see many opportunities. This is am amazing time to be alive and I choose to live and thrive. 2012 will be a challenging market to navigate, but if you surround yourself with an expert or a team of experts you can realize success.
Have a happy and healthy holiday season and a great New Year!
However, why does this current downturn feel more like a pending calamity that will have no end, no silver lining and no way out?
I think that instant communication has created a panic society that is reactionary. What do I mean? As news travels at the speed of light over the internet, the general public as well as investors and large money fund managers react to news, rather than take the time to consider what it really means.
Watching Jim Cramer’s stock market analysis for 15 minutes each morning before I go to my workout is a prime example of panic and reaction, and the lack of any credibility of our news and its analysis of why things happen.
For the past months, Greece’s debt and bailouts were the reason that stocks climbed, but recently the market dropped 400 points with the Italian debt crisis as the hot topic. These are distractions that go along with the Penn State crisis, housing numbers, unemployment and the stateside visit of Prince William.
Now for the majority of Americans, this is a frightening reality. Low interest rates are affecting most older retirees as they have a fixed income that is being absorbed as the equity is being used. Market interest rates should be at 7%+ and prime rates should be there as well. But, we are in a time when “too big to fail” economics prevail and the average American is up the creek without a paddle. Medical costs are a disaster and again, the average American is in the difficult position of deciding between food, shelter or medical needs.
This is a real problem that requires hard answers if it is going to be solved. As I watch the republican presidential debates, I see that we are in worse trouble than I could imagine. Which one of these people could I trust to actually do anything, and which could captivate our country and world to make a real impact? I think Newt Gingrich may have a chance, but we’ll see. The other guy is Ron Paul, who is a genius in economics, but the media makes him out to be a nut.
So we have very few choices and they are not too good. This is why people are marching in the streets and this is why so many people I talk to are somewhat depressed. The media is feeding on any bit of tabloid crap they can report, and sensationalizing everything with a negative spin.
Fortunately, when I get in my car and drive to work, I pass millions if not hundreds of millions of dollars worth or real estate. Bernie Madoff can't hide that on a balance sheet, nor can the hedge fund managers pick it up and move it while we sleep. I can rest easy that if I have a good tenant and low debt, and manage my affairs properly, I will be safe from harm’s way. Real estate in Los Angeles is the single safest investment you can make.
We have a few earthquakes, but for the most part, very little property damage when they occur. The risk comes with not being educated and just buying something you do not understand. I can say that although I have been in real estate for over 25 years, I don't understand the office market. When I have that type of request, I usually refer it out to someone with more expertise. I think I understand retail and am an expert in industrial property, so I look for opportunities in those markets.
My goals for 2012 are the following:
1. Buy more industrial buildings in Los Angeles
2. Buy properties that are adjacent to my existing holdings when possible.
3. Grow my brokerage business by continuing to provide honest market insight for my clients.
Every generation has been faced with challenges that cause the majority to sit and wonder what will happen, while the few build their wealth, holdings and real estate portfolios. They buy first notes, invest in notes, buy buildings and reposition them with different uses and tenants. They are conservative yet aggressive. These syndicates, individuals, families and corporations have a business plan and stick to it.
As we are exposed to uneducated and over-educated reporters and experts who tell us what we should think, it is easy to be distracted from your goals. It is easy to be frightened into inaction. The time to buy is when everyone else is selling, when most are frozen and panicking.
As I see the growth in the companies that have planned well and survived the downturn, I see light at the end of the tunnel. I see many opportunities. This is am amazing time to be alive and I choose to live and thrive. 2012 will be a challenging market to navigate, but if you surround yourself with an expert or a team of experts you can realize success.
Have a happy and healthy holiday season and a great New Year!
Tuesday, November 1, 2011
Tribe of Ants
You probably are like me and have never heard of Yang Lan, Sina nor Tencent before. Yang Lan is a most beautiful woman and also the "Oprah Winfrey" of Mainland China. In a recent presentation, she discussed the current status of China, social media and the potential future for the next generation of young Chinese.
Sina and Tencent are two micro-blog sites that respectively have 140 million and 200 million daily users and are the Chinese equivalent of our Twitter. 80% of the users are less than 30 years old. From 1980 to 2000, the one-child policy was in effect and most people chose to keep the son and abort the daughter. So there are 30 million more boys in this age group than girls. Imagine the problem there.
The education rate is high with this new generation, with only 1% illiteracy. 80% go to college. Here is the tough part: the average starting salary for a college graduate is $400 per month. But, the cost of an apartment due to ramped up growth is $500 per month. So these young grads entering the job market must share a small space with multiple people to save any money and to buy the goods they desire. They call themselves "The Tribe of Ants".
They also desire the best cars, clothes and all the things of status that will give them self worth. Five million people per month in China are purchasing new cell phones. These numbers are insane to comprehend.
There are 1.3 billion people in China. 100 million are in the ruling class (i.e. the government). 300 million are living in high style, better than the average high income earning Americans, while 900 million are living in poverty. When I discuss these numbers and issues with my Chinese friends and local business clients, they say they fear a political and social uprising in their home country.
The young and educated are Tweeting, or Tencent-ing about social misdeeds, corruption and other things that the government is doing that upsets the general population. Social justice and corporate greed are at the top of their list of concerns.
We have 300 million people living in America. 40-45 million are unemployed today. It is very hard to find a job fresh out of college, and even 50% of the MBA's are unable to find work. The Occupy Wall Street movement that is gaining momentum across the country is calling for an end to corporate greed and government mismanagement. Some want to shut down Wall Street, end capitalism and replace it with a redistribution of wealth, and give everyone free medical care and a living wage without working. I don't know what else they are asking for, but it is a little scary. I think things will get way out of control.
The reality is that our work force is shrinking, which means that the average person’s ability to buy goods and services at their local retailers is diminishing. People are cutting back and even those that can afford to buy all items large and small are also holding back. Companies are not hiring, and even government departments like the Post Office are letting people go. They are also going to stop Saturday deliveries.
Meanwhile, Los Angeles real estate continues to be strong and the market is hot. The top selling products are apartment buildings, and they are trading at very low cap rates (meaning the annual return is low), between 3% and 8% except for special foreclosure deals. We had a bankruptcy auction recently and the property sold for 100% over the asking price with three bidders going at it in court. Land for development of apartments is also in high demand. Corporate tenant-leased investment property is also in demand as investors are looking for a higher rate of return on their dollars than a bank can give them.
Additionally, interest rates are at a all time low. I was quoted 5% interest for a land acquisition and an SBA loan. For an owner/user the interest is at 5% or sub-5%. You can be in business and buy a building for your use and get a 20-25 year fully amortized fixed loan at 5% or less, which is amazing. In Los Angeles, industrial real estate vacancies are at 4.5%, but there are still deals to be had.
The desire to be in Los Angeles is great overseas. EB5 is a prime example of a program where a non-US citizen can invest $500,000 in a real estate deal and get a visa/green card. This is what is funding the deal across from LA Live for the new Marriott Hotel. The developer has partnered with equity promoters to raise the money and I heard it has been done. America is the land of opportunity, and many foreigners want to have their children go to school here and live in the safety of America. They watch our movies and TV shows and want to be in Los Angeles. They want to see movie stars and go to Laker's games, shop on Rodeo Drive and visit Las Vegas.
The average Chinese person cannot purchase quality goods and services due to the low economic value of their labor/work force. They cannot freely travel or realize their life ambitions. But the upper class can spend $500,000 and get into the United States. On the other side of the big pond, the average American is closer to falling into the same boat as their Chinese counterparts. People are struggling just to get by and are not being afforded the “American Dream”. Young Americans, welcome to "The Tribe of Ants".
Prediction Watch:
QE3 any day now.
An American bailout of $1-3 Trillion for Europe.
More hidden inflation with low interest rates, so keep buying the best Los Angeles real estate.
$2,000 an oz. gold is next.
Sina and Tencent are two micro-blog sites that respectively have 140 million and 200 million daily users and are the Chinese equivalent of our Twitter. 80% of the users are less than 30 years old. From 1980 to 2000, the one-child policy was in effect and most people chose to keep the son and abort the daughter. So there are 30 million more boys in this age group than girls. Imagine the problem there.
The education rate is high with this new generation, with only 1% illiteracy. 80% go to college. Here is the tough part: the average starting salary for a college graduate is $400 per month. But, the cost of an apartment due to ramped up growth is $500 per month. So these young grads entering the job market must share a small space with multiple people to save any money and to buy the goods they desire. They call themselves "The Tribe of Ants".
They also desire the best cars, clothes and all the things of status that will give them self worth. Five million people per month in China are purchasing new cell phones. These numbers are insane to comprehend.
There are 1.3 billion people in China. 100 million are in the ruling class (i.e. the government). 300 million are living in high style, better than the average high income earning Americans, while 900 million are living in poverty. When I discuss these numbers and issues with my Chinese friends and local business clients, they say they fear a political and social uprising in their home country.
The young and educated are Tweeting, or Tencent-ing about social misdeeds, corruption and other things that the government is doing that upsets the general population. Social justice and corporate greed are at the top of their list of concerns.
We have 300 million people living in America. 40-45 million are unemployed today. It is very hard to find a job fresh out of college, and even 50% of the MBA's are unable to find work. The Occupy Wall Street movement that is gaining momentum across the country is calling for an end to corporate greed and government mismanagement. Some want to shut down Wall Street, end capitalism and replace it with a redistribution of wealth, and give everyone free medical care and a living wage without working. I don't know what else they are asking for, but it is a little scary. I think things will get way out of control.
The reality is that our work force is shrinking, which means that the average person’s ability to buy goods and services at their local retailers is diminishing. People are cutting back and even those that can afford to buy all items large and small are also holding back. Companies are not hiring, and even government departments like the Post Office are letting people go. They are also going to stop Saturday deliveries.
Meanwhile, Los Angeles real estate continues to be strong and the market is hot. The top selling products are apartment buildings, and they are trading at very low cap rates (meaning the annual return is low), between 3% and 8% except for special foreclosure deals. We had a bankruptcy auction recently and the property sold for 100% over the asking price with three bidders going at it in court. Land for development of apartments is also in high demand. Corporate tenant-leased investment property is also in demand as investors are looking for a higher rate of return on their dollars than a bank can give them.
Additionally, interest rates are at a all time low. I was quoted 5% interest for a land acquisition and an SBA loan. For an owner/user the interest is at 5% or sub-5%. You can be in business and buy a building for your use and get a 20-25 year fully amortized fixed loan at 5% or less, which is amazing. In Los Angeles, industrial real estate vacancies are at 4.5%, but there are still deals to be had.
The desire to be in Los Angeles is great overseas. EB5 is a prime example of a program where a non-US citizen can invest $500,000 in a real estate deal and get a visa/green card. This is what is funding the deal across from LA Live for the new Marriott Hotel. The developer has partnered with equity promoters to raise the money and I heard it has been done. America is the land of opportunity, and many foreigners want to have their children go to school here and live in the safety of America. They watch our movies and TV shows and want to be in Los Angeles. They want to see movie stars and go to Laker's games, shop on Rodeo Drive and visit Las Vegas.
The average Chinese person cannot purchase quality goods and services due to the low economic value of their labor/work force. They cannot freely travel or realize their life ambitions. But the upper class can spend $500,000 and get into the United States. On the other side of the big pond, the average American is closer to falling into the same boat as their Chinese counterparts. People are struggling just to get by and are not being afforded the “American Dream”. Young Americans, welcome to "The Tribe of Ants".
Prediction Watch:
QE3 any day now.
An American bailout of $1-3 Trillion for Europe.
More hidden inflation with low interest rates, so keep buying the best Los Angeles real estate.
$2,000 an oz. gold is next.
Tuesday, October 11, 2011
To Serve Man
In the 1960's TV series Twilight Zone by Rod Serling, there was an episode about aliens that brought amazing gifts to mankind and Earth. The cure to cancer, famine and many other gifts. One of those gifts was a book, but no one could translate the literature. Humans by the thousands were being given free trips to the new alien planet. When the code was finally broken, it was discovered that the book; To Serve Man, was a cookbook!
In today's volatile economy, it seems that we are all being cooked, in the soup, so to speak. What is predictable but most troubling is the blame game that is going on by our so called leaders and the media. No one wants to take responsibility for the situation, nor offer real solutions to the problems.
The blame game is an old political game to maintain power, or not to lose what power is held. The President, with his address to Congress and the nation tries to imply that the Republican Congress is to blame for the lack of jobs and delay in moving the country forward. The liberal media jumps on the bandwagon and tries to sell this to the public. Then when the validity of the plan is broken down to its total sum of parts, and there really is no defense to its chance to be successful, the current administration starts to harp on President Bush.
The problem with the blame game is that it does not help. It looks backward and not forward. It does not take into account the current situation and it does not provide reasonable methods for real solutions. Now, the Republicans are not much better, as they use their media influences to put road blocks into the system and this is not to protect us from the future "socialist policies" of the Obama administration. This is solely to make the President and Democrats look bad.
Real solutions don't have labels of Democrat or Republican, liberal or conservative, good or evil. They don't bash each other on CNBC or Fox. They come from people who want to do the right thing and move forward. Now, understanding the root of a problem is the first step to solving it. Then, having the courage to change the current problem is the real hard part. Why is doing the right thing so hard? Because then you most probably will not get re-elected!
We have been so conditioned in our lives that the person who tells us the "sky is falling" even if it is, will be the messenger. And we all know what happens to the messenger!
So we have hit the double dip turning point. The markets will be going down again, and without solid cooperative initiatives, this drop will be rather significant. So far it has hit us slowly, by attrition. The numbers are so alarming and shocking that they are almost being overlooked:
• Unemployment is at an all time high
• Housing is at an all time low
• Bankruptcies are at an all time high
• Interest rates are at an all time low
• Debt is at an all time high
• Consumer confidence is at an all time low
• Worldwide political turmoil is at an all time high
If the above was in a book given to us by aliens, when we deciphered it we would do our best to defend the world against the invaders and expel them. Rather than get in the blame game, let's discuss some real (maybe radical) solutions to our problems.
The way to build a solid financial foundation is from the bottom up, not trickle-down economics (with all due respect to my favorite President, Ronald Reagan). In September 2008, I had a discussion with our local U.S. Congressman about the financial situation we were heading into. I gave him a grave warning that the commercial real estate market was about to crash. I explained what was happening in the credit and business worlds of real estate, and to my clients. Then I offered the following solutions. And, as I see this double dip hitting the markets again, I offer these same solutions today:
• The federal government should enact an emergency law that all existing residential real estate loans under one million dollars shall become fixed at 2% interest only for the term of the current economic crisis.
• New residential loans under $1M shall be fixed at 4% interest only, as well.
• All credit card debt shall be fixed at 2% interest only. New credit card debt shall be 4% interest only.
What will these few aggressive economic moves do to help us out of this double dip and move toward economic stability?
The ability to pay a reduced interest will provide more net cash for millions of Americans. The reduced interest with the option to pay or not pay the principle until the crisis is over will allow millions to spend that saved money on things that they need or want: Better education for their kids; repairs to their cars and homes; purchases of new homes; rent a better apartment; go out to dinners and take trips.
The above economic changes will reflect in the stabilization of the housing market. It will stimulate buying and stop the massive foreclosures, and millions will see the “light at the end of the tunnel”. They will be able to afford the monthly payments and will want to make the payments because they will reestablish equity as the markets stabilize.
Having the credit card debt reduced to a monthly payment that will be manageable will make the average person also feel that they have more access to money to spend. By doing these simple emergency policies to help everyone, from the bottom up, new businesses will form. People will be hired as demand grows. We will have a vibrant growing economy that can be weaned off the low interest and get back to being productive.
Back in September 2008, the Congressman told me in reply to my ideas that “we are not going to do anything for the people". Where was my tape recorder? But I don't want to hurt anyone, nor blame a good man that did not see business from the views of an insider like me. I just want to share a real story and my ideas with you, my readers.
There are many more things we can do to help our economy. And there are good people that want to do what is right. They just get caught up in the system of the blame game. I suggest they throw out the old cookbook and get a new one, before we all end up in the soup.
In today's volatile economy, it seems that we are all being cooked, in the soup, so to speak. What is predictable but most troubling is the blame game that is going on by our so called leaders and the media. No one wants to take responsibility for the situation, nor offer real solutions to the problems.
The blame game is an old political game to maintain power, or not to lose what power is held. The President, with his address to Congress and the nation tries to imply that the Republican Congress is to blame for the lack of jobs and delay in moving the country forward. The liberal media jumps on the bandwagon and tries to sell this to the public. Then when the validity of the plan is broken down to its total sum of parts, and there really is no defense to its chance to be successful, the current administration starts to harp on President Bush.
The problem with the blame game is that it does not help. It looks backward and not forward. It does not take into account the current situation and it does not provide reasonable methods for real solutions. Now, the Republicans are not much better, as they use their media influences to put road blocks into the system and this is not to protect us from the future "socialist policies" of the Obama administration. This is solely to make the President and Democrats look bad.
Real solutions don't have labels of Democrat or Republican, liberal or conservative, good or evil. They don't bash each other on CNBC or Fox. They come from people who want to do the right thing and move forward. Now, understanding the root of a problem is the first step to solving it. Then, having the courage to change the current problem is the real hard part. Why is doing the right thing so hard? Because then you most probably will not get re-elected!
We have been so conditioned in our lives that the person who tells us the "sky is falling" even if it is, will be the messenger. And we all know what happens to the messenger!
So we have hit the double dip turning point. The markets will be going down again, and without solid cooperative initiatives, this drop will be rather significant. So far it has hit us slowly, by attrition. The numbers are so alarming and shocking that they are almost being overlooked:
• Unemployment is at an all time high
• Housing is at an all time low
• Bankruptcies are at an all time high
• Interest rates are at an all time low
• Debt is at an all time high
• Consumer confidence is at an all time low
• Worldwide political turmoil is at an all time high
If the above was in a book given to us by aliens, when we deciphered it we would do our best to defend the world against the invaders and expel them. Rather than get in the blame game, let's discuss some real (maybe radical) solutions to our problems.
The way to build a solid financial foundation is from the bottom up, not trickle-down economics (with all due respect to my favorite President, Ronald Reagan). In September 2008, I had a discussion with our local U.S. Congressman about the financial situation we were heading into. I gave him a grave warning that the commercial real estate market was about to crash. I explained what was happening in the credit and business worlds of real estate, and to my clients. Then I offered the following solutions. And, as I see this double dip hitting the markets again, I offer these same solutions today:
• The federal government should enact an emergency law that all existing residential real estate loans under one million dollars shall become fixed at 2% interest only for the term of the current economic crisis.
• New residential loans under $1M shall be fixed at 4% interest only, as well.
• All credit card debt shall be fixed at 2% interest only. New credit card debt shall be 4% interest only.
What will these few aggressive economic moves do to help us out of this double dip and move toward economic stability?
The ability to pay a reduced interest will provide more net cash for millions of Americans. The reduced interest with the option to pay or not pay the principle until the crisis is over will allow millions to spend that saved money on things that they need or want: Better education for their kids; repairs to their cars and homes; purchases of new homes; rent a better apartment; go out to dinners and take trips.
The above economic changes will reflect in the stabilization of the housing market. It will stimulate buying and stop the massive foreclosures, and millions will see the “light at the end of the tunnel”. They will be able to afford the monthly payments and will want to make the payments because they will reestablish equity as the markets stabilize.
Having the credit card debt reduced to a monthly payment that will be manageable will make the average person also feel that they have more access to money to spend. By doing these simple emergency policies to help everyone, from the bottom up, new businesses will form. People will be hired as demand grows. We will have a vibrant growing economy that can be weaned off the low interest and get back to being productive.
Back in September 2008, the Congressman told me in reply to my ideas that “we are not going to do anything for the people". Where was my tape recorder? But I don't want to hurt anyone, nor blame a good man that did not see business from the views of an insider like me. I just want to share a real story and my ideas with you, my readers.
There are many more things we can do to help our economy. And there are good people that want to do what is right. They just get caught up in the system of the blame game. I suggest they throw out the old cookbook and get a new one, before we all end up in the soup.
Thursday, September 1, 2011
Through the Wormhole
In the cable TV series Through the Wormhole narrated by Morgan Freeman, the amazing questions of life and the future of life are asked:
Can we travel faster than the speed of light?
Will man live to be immortal?
Is there life on other planets in the universe?
These and many more questions are asked, and more often than not when the show is over, there seems to be more questions than answers.
I just returned from a short camping trip with my son Sam, my nephews Jeremy and Jesse, their father Steve and Larry Musgrove (my boxing coach). We spent a few days at Jeffrey's campground just outside of Bishop, California. As I lay in my sleeping bag at an altitude of 8,000 feet under the stars, I saw untold stars in a pitch black sky. It was magical and mysterious, breath taking and inspiring. I was instantly transported from a world of hustle and bustle to the tranquility and solitude of the wilderness. All work, real estate and the deals in progress were forgotten for the time and true relaxation set in.
During these times of uncertainty and volatile stock markets, doom and gloom prognosticators abound. They thrive on the discussion of political unrest, economic turmoil and financial swings that can shatter your nerves.
These are the times to understand what is really important in life and spend time doing those things. Understanding the up and down cycles of the real estate business can prepare you for those crazy times when the world seems to be out of control. Your financial survival depends on understanding these cycles and preparing for them.
Here is a list of the basic skills and rules that I have lived by to succeed:
1. Understand and control the use of leverage.
2. Bulls get rich, bears get rich, but pigs get slaughtered.
3. Buy when the masses are selling and sell when the masses are buying.
4. Don't put all of your eggs in one basket.
In 1999, I bought my first condo to live in for $220,000 with $20,000 down. I flipped it in three months for $300,000 and bought a house for $540,000. I sold the house two years later for $1,000,000 and bought a house that I live in today for $1,400,000. I started with $20,000 and turned it into $1,400,000. Three years ago, the house would have sold for $2,600,000, but I intend to live there quite some time as I am content. I have a $700,000 mortgage so I still have great equity.
This is an example of leverage that can turn $20,000 into $1,400,000+ within a short time. I could sell and get $700,000 profit, but then where would I live?
The same types of deals have been made for years in all types of investment properties. However, using strategy and being conservative can be very helpful when markets change direction. Therefore, understanding leverage, risk and reward, and knowing when to sell or to pay down those loans as the cash flow is coming in, can make the average investor look like a pro. The building of equity will pay off in the long run.
I have had many clients that continued to take risk and leverage up and up without any consideration for a down market. Those clients lost properties and millions of dollars. Others that were prepared, lowered their debt even in the high times and moved forward but with caution. They are now the buyers of lost properties.
Some real estate pros, who amassed huge portfolios of all types of real estate, got greedy and leveraged their entire life's work and put the money into one deal. But delays in construction, market upheavals, the lending and finance crisis, and actual housing declines caused a crash and a loss of a life's work. Bankruptcy, default, legal lawsuits and disruptions of family dynamics are the repercussions of greed. Don’t gamble recklessly in markets that always have up and down cycles .
I am asked (especially in times like these): "What will happen to the market?". If you have been following my blog posts, you know my answer. But I feel like I’m in a "wormhole" myself, as any “answer” is only based upon an educated guess. But this time the situation is much different than anything we have seen in our history.
Real estate values will act in accordance to the basic principles of supply and demand, and depend as always on “location, location, location”. Some properties will rebound and thrive, while other properties will not. Predicting good and bad markets can seem risky for the investor. For the end user, not so much. Predicting the end user’s needs and their ability to thrive in a given economic environment is essential to every real estate transaction.
As a user, the owner of a business can predict the general trends of his market. As an investor, this can be tricky to follow. Today, location must be a priority to determine if a real estate deal is good or not. Buying a 100,000 sq.ft. warehouse for $20 per sq.ft. in Kentucky with a major corporate tenant is not a good deal if you have no chance to replace the tenant should they move or close up. The same warehouse that is $100 per sq.ft. in Vernon, CA might provide a better opportunity to re-lease should you lose your tenant. The same goes for an apartment complex in a suburb of Dallas vs. the San Fernando Valley or West Los Angeles.
At the end of the day, long term success depends on understanding location and value and predicting future needs and markets. The population of Los Angeles and Southern California continues to grow and the future requirements for housing, services, etc. will expand also. Get educated before making a plunge into a market that you don’t understand. Stay leverage safe, as if the property you just leased might go vacant for a year or longer. Can you still maintain it and hold it? If so, you can take the risk and absorb the potential downside.
Equally, but more important to me, live life as if there is no tomorrow. Enjoy family and friends as they are the most important things in life. Give of yourself generously to the next generation and to those less fortunate. After all, you cannot take it with you. Life can be a journey through a wormhole, as the next day may bring something we never anticipated. That is what makes each day a blessing and fun.
Can we travel faster than the speed of light?
Will man live to be immortal?
Is there life on other planets in the universe?
These and many more questions are asked, and more often than not when the show is over, there seems to be more questions than answers.
I just returned from a short camping trip with my son Sam, my nephews Jeremy and Jesse, their father Steve and Larry Musgrove (my boxing coach). We spent a few days at Jeffrey's campground just outside of Bishop, California. As I lay in my sleeping bag at an altitude of 8,000 feet under the stars, I saw untold stars in a pitch black sky. It was magical and mysterious, breath taking and inspiring. I was instantly transported from a world of hustle and bustle to the tranquility and solitude of the wilderness. All work, real estate and the deals in progress were forgotten for the time and true relaxation set in.
During these times of uncertainty and volatile stock markets, doom and gloom prognosticators abound. They thrive on the discussion of political unrest, economic turmoil and financial swings that can shatter your nerves.
These are the times to understand what is really important in life and spend time doing those things. Understanding the up and down cycles of the real estate business can prepare you for those crazy times when the world seems to be out of control. Your financial survival depends on understanding these cycles and preparing for them.
Here is a list of the basic skills and rules that I have lived by to succeed:
1. Understand and control the use of leverage.
2. Bulls get rich, bears get rich, but pigs get slaughtered.
3. Buy when the masses are selling and sell when the masses are buying.
4. Don't put all of your eggs in one basket.
In 1999, I bought my first condo to live in for $220,000 with $20,000 down. I flipped it in three months for $300,000 and bought a house for $540,000. I sold the house two years later for $1,000,000 and bought a house that I live in today for $1,400,000. I started with $20,000 and turned it into $1,400,000. Three years ago, the house would have sold for $2,600,000, but I intend to live there quite some time as I am content. I have a $700,000 mortgage so I still have great equity.
This is an example of leverage that can turn $20,000 into $1,400,000+ within a short time. I could sell and get $700,000 profit, but then where would I live?
The same types of deals have been made for years in all types of investment properties. However, using strategy and being conservative can be very helpful when markets change direction. Therefore, understanding leverage, risk and reward, and knowing when to sell or to pay down those loans as the cash flow is coming in, can make the average investor look like a pro. The building of equity will pay off in the long run.
I have had many clients that continued to take risk and leverage up and up without any consideration for a down market. Those clients lost properties and millions of dollars. Others that were prepared, lowered their debt even in the high times and moved forward but with caution. They are now the buyers of lost properties.
Some real estate pros, who amassed huge portfolios of all types of real estate, got greedy and leveraged their entire life's work and put the money into one deal. But delays in construction, market upheavals, the lending and finance crisis, and actual housing declines caused a crash and a loss of a life's work. Bankruptcy, default, legal lawsuits and disruptions of family dynamics are the repercussions of greed. Don’t gamble recklessly in markets that always have up and down cycles .
I am asked (especially in times like these): "What will happen to the market?". If you have been following my blog posts, you know my answer. But I feel like I’m in a "wormhole" myself, as any “answer” is only based upon an educated guess. But this time the situation is much different than anything we have seen in our history.
Real estate values will act in accordance to the basic principles of supply and demand, and depend as always on “location, location, location”. Some properties will rebound and thrive, while other properties will not. Predicting good and bad markets can seem risky for the investor. For the end user, not so much. Predicting the end user’s needs and their ability to thrive in a given economic environment is essential to every real estate transaction.
As a user, the owner of a business can predict the general trends of his market. As an investor, this can be tricky to follow. Today, location must be a priority to determine if a real estate deal is good or not. Buying a 100,000 sq.ft. warehouse for $20 per sq.ft. in Kentucky with a major corporate tenant is not a good deal if you have no chance to replace the tenant should they move or close up. The same warehouse that is $100 per sq.ft. in Vernon, CA might provide a better opportunity to re-lease should you lose your tenant. The same goes for an apartment complex in a suburb of Dallas vs. the San Fernando Valley or West Los Angeles.
At the end of the day, long term success depends on understanding location and value and predicting future needs and markets. The population of Los Angeles and Southern California continues to grow and the future requirements for housing, services, etc. will expand also. Get educated before making a plunge into a market that you don’t understand. Stay leverage safe, as if the property you just leased might go vacant for a year or longer. Can you still maintain it and hold it? If so, you can take the risk and absorb the potential downside.
Equally, but more important to me, live life as if there is no tomorrow. Enjoy family and friends as they are the most important things in life. Give of yourself generously to the next generation and to those less fortunate. After all, you cannot take it with you. Life can be a journey through a wormhole, as the next day may bring something we never anticipated. That is what makes each day a blessing and fun.
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