by...
WHO COULD HAVE KNOWN ABOUT THE REAL ESTATE BUBBLE? WELL WHO DIDN'T WHO HAD DONE ANY REAL STUDYING ABOUT THE PROS AND CONS OF DIFFERENT INVESTING APPROACHES?
I received a comment on "BURSTING OF CREDIT BUBBLE UNDERLIES STOCK MARKET TURBULENCE," which was a repost of a Socialist article about the developing credit/debt crisis written back in early August of 2007. It got me to thinking in my reply to the commentator about how I heard over and over, "Who could have known" about the terrible mismanagement of the economy. It occurred to me that I may never have explained my own situation and how it pertains directly to that "Who could have known" nonsense.
Back in April 2001, I started looking for residential investment properties. I used the old-school method. I looked for a capitalization rate I could live with. I looked for positive cash flow. I looked for properties I could improve. I made dozens of offers, but had no takers. I didn't even get one counter-offer. The agent I was dealing with became rather exasperated with me. I was using the exact same criteria I had used a couple of decades before that had reaped huge, relative rewards for my parents. I won't go into why I didn't continue. It's too personal and other people's feelings will be unnecessarily hurt. We've all gotten beyond things from decades ago even if not quite as frankly as I would prefer, but some people are just more willing to risk self-evaluation than are others. Enough said on that.
Well, the real estate market was literally requiring that I throw caution to the wind. That was before I was a Christian by the way. I hadn't done enough studying to truly know what Jesus was teaching. I was too swept up by American socialization. It had been a long time since I bought the whole thing hook-line-and-sinker, but things were going just poorly enough that I questioned whether I knew better, so I kept trying the American party line.
Getting back to the subject of the real estate and as I mentioned in my comment cited above, back in 2001:
Back in April 2001, I started looking for residential investment properties. I used the old-school method. I looked for a capitalization rate I could live with. I looked for positive cash flow. I looked for properties I could improve. I made dozens of offers, but had no takers. I didn't even get one counter-offer. The agent I was dealing with became rather exasperated with me. I was using the exact same criteria I had used a couple of decades before that had reaped huge, relative rewards for my parents. I won't go into why I didn't continue. It's too personal and other people's feelings will be unnecessarily hurt. We've all gotten beyond things from decades ago even if not quite as frankly as I would prefer, but some people are just more willing to risk self-evaluation than are others. Enough said on that.
Well, the real estate market was literally requiring that I throw caution to the wind. That was before I was a Christian by the way. I hadn't done enough studying to truly know what Jesus was teaching. I was too swept up by American socialization. It had been a long time since I bought the whole thing hook-line-and-sinker, but things were going just poorly enough that I questioned whether I knew better, so I kept trying the American party line.
Getting back to the subject of the real estate and as I mentioned in my comment cited above, back in 2001:
…smaller residential real estate landlords were buying based nearly entirely on appreciation.
I was rusty in investing, but I had studied John T. Reed (not an endorsement of all things John T. Reed; he does know his way around the capitalist-investing system though [real estate]). His investing strategy warned against bubbles. I trusted what I had learned. I backed off looking for real estate investments I could afford (that the lenders would let me buy but would send me into bankruptcy a few years later if I weren't to have gotten out in time — something I didn't feel comfortable about back then — now I know it's insider information) and slowly started analyzing what's wrong with the whole system again. I had done it once before in my late teens. Then came 9/11 followed by Afghanistan but then the hugely conspicuous Iraq invasion. That led me to search out the answers as to why things were heading so wrong again (Vietnam-War wrong). I just didn't think the American people were stupid enough to vote in people who would lead the nation back into that level of pure evil.
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Tuesday, November 11, 2008 @ 6:48:28 PM (Pacific Time)
I believe there are cycles to things around including financial markets and real estates just there are cycles in weather.
7 years of prosperity and 7 years of scarcity.
Saturday, November 15, 2008 @ 3:05:39 PM (Pacific Time)
@Benjamin Lee –
Hi Benjamin Lee,
Yes, there are cycles. Some are natural. Others are human caused.
Blessings,
Tom Usher