I think the economic situation right now is incredibly difficult for first time real estate investors to navigate.
Ashamed to admit that in a clubhouse room last night I advised a person with $500k liquid that their best course of action might just be to wait.
IMO its a toss up between a roaring few years and a significant pullback.
That + the insanely competitive seller's market means a lot of risk for first-time investors...
Could be stuck holding a so-so asset for a long time w/ little cashflow or appreciation.
The bull case outweighs the bear case...
War time spending, a government that has shown it won't let a depression happen, inflation taking hold, rates likely to stay low.
+ cash printing to the extreme makes our cash less valuable every day.
Get in the game now right?
On the other hand you have wages stagnated, folks overpaying for even the worst assets (4-5 caps), and the negative impact inflation has in the near term...
(tougher to borrow, temporary decrease in asset prices)
Could be a pretty rough 3 years ahead and a serious debt crunch.
My advice:
Find an operational advantage and focus on cashflow.
If you can't cashflow and find a way to buy something that is more valuable to you than it is to others then don't buy something.
Find a small business disguised (and taxed) as real estate!
We are surviving right now (and doing deals) because of our operational advantage.
A 5.5 or 6 cap storage facility for other buyers is a 7-8 cap for us.
And we can cashflow and continue to cashflow if things get really though.
To keep up with inflation we are parking our reserves 1/2 in cash and 1/2 in growth stocks ($GOOGL, $FB and other companies that print cash, aren't insanely overvalued, and could offer liquidity at any time).
Never fully insulated, but we are doing our best.
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Discounting $500 to the first 100 folks with code "TWITTER"- and then the price goes up (forever).
Pumped to put this out into the world!
(you can pay and pre-enroll now)
Who this isn't for:
Those who want to start with no money and get rich in real estate.
Who its for:
Those who have capital or operational chops and want to make real estate a part of their future (through investing with others or doing your own deals).
I will be offering scholarships for students or those without the means to purchase the course.
DM me for more info!
And if this isn't for you - don't worry - I'll continue to post everything I know here on Twitter!
Next time you pull up to a meeting in your $100k car, I hope you know the first thought of your potential partner is not:
"Wow this person does well, I need to work with them"
Instead, its:
"This is where the fees are going?"
Triggered a lot of folks with $100k cars with this one.
I’m just being honest about the thought that crossed my mind when a contractor showed up to give a bid at my home in his $120k F-350 Superduty Platinum.
I don’t have anything against folks who drive nice cars.
I personally think they’re a waste of money. A lot of people feel like me and think like the original post.
There is nuance, of course and this doesn’t apply to everyone.