Risk is the Enemy - Greenspan is the Devil
Remember this spring when the stock market tanked. In just 24 hours…
Former FED Chairman Greenspan uttered the “R” word - Recession
* The Chinese stock market tanked while we were sleeping
* Dow Jones lost 416 points as if falling right off a cliff
* AND every other index around the world followed over the edge like so many lemmings
In the US alone over $583 Billion went POOF because one ex-government employee’s single remark.
Now your stock broker will still tell you the markets are safe despite these “fluctuations” and try to convince you that Real Estate Investing is much more risky. It is the same tune they sang while the markets went through the Dot-Bomb melt down.
It is a great reminder of why you have to invest a portion of your portfolio in Real Estate and NOT stocks. Let’s count the ways.
*You Know Your Profit When You Buy*
You know what you will pay for the property. You know how you will upgrade the buildings and the tenants … so you can calculate your profits before you actually purchase the property.
You can pencil out your plan to improve the property, raise the rents, lower expenses and get a pretty good bead on the value of the property given the resulting increase in cash flow.
*Predictable Cash Flow Lets You Rest Easy*
When you hold cash flowing commercial real estate you can sleep like a baby - no matter what anyone (including Mr. Greenspan) says.
That flow of cash comes from processes you can understand and predict. Rent minus expenses. AND you can raise the rents and lower the expenses to force appreciation of your property - that’s on top of the income… cool.
*More Leverage Than You Can Shake a Stick At*
For every $1000 you need to buy a property, you only need $200 in cash and it doesn’t even have to be yours.
Just imagine going in to Merrill Lynch with $2000 from one of your investor friends and ask to buy $10,000 of stock. They flat out would not know how to respond.
Yet you can bring $200K of your investor’s cash to a deal and buy a $1M piece of investment property any day of the week.
*Save On Your Taxes*
Name me any other investment that can get you a tax write off year after year - for decades mind you - while it goes UP in value. You have to love Depreciation.
Look at Mutual Funds for a contrast. There you can owe taxes even though the fund lost money in that year. Now that’s safety for you.
So when you are doing your due diligence and making the contacts that will bring a good piece of property into your portfolio, remember the unique benefits of Commercial Real Estate Investing and know you are eliminating some major risks to your wealth.
Forget about Greenspan and how much the Dow Jones fell that day.
Remember you depreciation, your leverage and your cash flow and put on a grin like the Cheshire Cat.
And at night, when you are ready for bed, you can forget about the market’s ups and downs and sleep well knowing your assets are in real estate.
