Real Estate…
An Individual Sport
The following is an article written by Prudential
There is so much drama about the real estate market today — why is that? Is it because changes in market conditions came so quickly? Is it because a home today is such a huge investment and a lot of money is at stake? Or is it because we have been spoiled for the last eight or nine years by the market’s stellar financial performance as an investment? The answer is “all of the above.”
The reality is there is absolutely nothing wrong with OR surprising about today’s real estate market. Houses are still selling and buyers are still buying. Some houses are sitting on the market for months, while others are selling without a problem. Why is that? Well, any market which experiences an increase in inventory of 250-300% in a very short period of time will create more competitiveness among sellers. This does not mean that the value of your real estate investment has diminished. It means that, in a more competitive environment, someone may be more motivated by personal needs to sell sooner than you might be. Timing is the real factor involved, not the integrity of the investment. Because you see, the beauty of real estate ownership in
Famed oil magnate J. Paul Getty was once asked by a newspaper reporter, “Mr. Getty, what is the secret to your success?” With a sly, craggy-faced smile, old J. Paul said, “Son, it’s simple. When everyone else sells, I buy!” Based on that theory, if you bought real estate between 1980-1985 or 1990-1995 – doom and gloom years representing the most recent market slowdowns – you are sitting pretty today if you still own it.
Buying was the smart move. The sellers in those years were all trying to beat the market, i.e., buy at the lowest and sell at the highest. If this is your goal, go to
bonds MUST be the thing to buy to get rich quick. If you bought one house in the year 1999 when the stock market was going crazy with billions invested in useless “dot-com” hot-air investments, you could have made 50-100% return on your investment every year from that year until the present time! Understand that when everyone tries to beat each other to the finish line, they create the adverse conditions, which prevent them from winning their own game.
The one issue of real estate invest-ment that most people do not do well with is the holding period. Real estate ownership is primarily intended to build wealth – not to make $30-$40,000 with a quick “flip” from one buyer to the next. Although that amount of money may solve a few small problems around the house, it is not how real wealth is accumulated. After selling costs and taxes, there isn’t that much left. Long-term ownership is the answer. Own the house until you find something more favorable, based on your needs, and then replace it with the next. Don’t ever get out of the ownership position. With this strategy in place, one day you will wake up wealthy, because you have accumulated a substantial amount of equity, possibly untouched by taxation if you are an investor.
Isn’t it interesting how most of what the average person does with his or financial wherewithal is done based on what everyone else is doing? If everyone else is buying stocks and bonds, then stocks and bonds MUST be the thing to buy to get rich quick. If you bought one house in the year 1999 when the stock market was going crazy with billions invested in useless “dot-com” hot-air investments, you could have made 50-100% return on your investment every year from that year until the present time! Understand that when everyone tries to beat each other to the finish line, they create the adverse conditions, which prevent them from winning their own game.
The one issue of real estate invest-ment that most people do not do well with is the holding period. Real estate ownership is primarily intended to build wealth – not to make $30-$40,000 with a quick “flip” from one buyer to the next. Although that amount of money may solve a few small problems around the house, it is not how real wealth is accumulated. After selling costs and taxes, there isn’t that much left. Long-term ownership is the answer. Own the house until you find something more favorable, based on your needs, and then replace it with the next. Don’t ever get out of the ownership position. With this strategy in place, one day you will wake up wealthy, because you have accumulated a substantial amount of equity, possibly untouched by taxation if you are an investor.
If you are talking about owning real estate as a home, then buy what you want to live in and can afford comfortably and live in it – enjoy it! If you want an investment, buy real estate and hold it long term. You will win. The real estate game is fun and profitable, if you calm down and do what’s right for you and your family – not what everyone else is doing. Just think about it – how much did your mom and dad pay for their house?
[Bob Majorino is the owner/Broker of Prudential
I Refuse to Participate in a Recession!
Information from our Broker Bob Majorino
11:24 AM PDT, March 27, 2008
Many economic gurus are saying the “R” word …. recession. For the most part, the
Unfortunately, every time the economy takes a downturn, the fallout is felt strongly by salespeople, business owners and professionals alike. Successful business professionals learn from the past. For some, this will not be our first recession.
So what did we learn from previous economic downturns? In the early ’90s, right in the middle of a nasty recession, I was at a business mixer in
I was introduced to one of the many real estate agents attending. Given the decrease in property values in the state, I was leery of asking this gentleman the standard “How’s business?” question. He shared with me, though, that he was having a great year. Naturally, I was surprised and asked, “You did say you were in real estate, didn’t you?”
“Yes.”
“We are in
“Yes,” he said with a slight grin.
“And you’re having a good year?” I asked.
“I’m actually having my best year ever!” he said.
“Your best year!” I said in amazement.
After thinking for a moment I asked him, “Is this your first year in real estate?” “No,” he replied with a laugh. “I’ve been in real estate for almost 10 years.” I asked him how he was doing so well, given the conditions of the economy and the stiff competition. He reached into his pocket and pulled out a badge that said:
I AbsolutelyRefuse to Participate in a Recession!
“That’s your secret?” I asked. “You refuse to participate in the recession, so business is booming?” “That’s correct,” he said. “While most of my competitors are crying the blues about how bad business is, I’m out drumming up a ton of business networking with my contacts and generating referrals.”
Considering what he said, I looked around the room and listened in on people for a while as they complained about how bad business was. While nearly all were commiserating with one another, I concluded that very few were actually networking and working on seeking new business. As a result, very little business was actually being accomplished. If you want to do well in business, you must understand that it does absolutely no good to complain to people about tough times. When you complain about how bad business is, half the people you tell don’t care and the other half are glad you’re worse off than they are.
While you cannot control the economy or your competition, you can control your response to the economy. Referrals can keep your business alive and well during an economic downturn. During the last recession, I watched thousands of businesspeople grow and prosper. They were successful because they consciously made the decision to refuse to participate in a recession. They did so by developing their networking skills and learning how to build their business through word of mouth.
Don’t let a bad economy be your excuse for failure. Instead, make it your opportunity to succeed. While others are looking at the problems, those of us looking for opportunities will not only get through a bad economy but will prosper.
This is syndicated from Networking Now, and written by Ivan Misner.
