Over a year ago I wrote Volume 24, No. 4 of the CommonWealth Letters which attempted to deal with the post-Y2K world once all the furor had died down. In it I made several predictions for the near-term future that turned out right:
Real estate investment clubs have been around for more than twenty years. They do a uniformly good job providing a forum in which members can network and exchange information. They invite speakers who present materials on a broad array investment and market subject matter for the benefit of their members. Yet, for the most part, investment club members more resemble entrepreneurs engaged in real business rather than investors. Investors are a different breed entirely.
Everybody likes a bargain, especially me; but how do you know the investment you're making is a bargain or not? When you're able to buy something for less than you could have at another time? When the price you pay is less than the price at which it is assessed for property tax purposes? When you can buy it for a price that's less than the price your friends paid? When you buy it for a lower price than something similar to it? When the seller tells you you're getting a real bargain? When it sells below appraised value? Suppose I told you that all or none of the above could be true?
Real estate buying and selling is a fairly straightforward proposition for the most part. Buyers buy, sellers sell, and brokers put buyers and sellers together to make a deal. The reason why they do this is also fairly basic. Buyers have a need for property they are buying; usually to use it themselves or to rent or sell it to others who need it. Sellers usually sell because they want to make a profit, avoid loss, become more liquid, or because there's something about the property that they don't like or are afraid of. Brokers assist in the process to earn commissions. The market these players create is almost totally dependent upon the availability of low cost credit.
I bought my first mobile home to get away from living with my in-laws. But my interest in them goes ever further back than that. As a young man in the Air Force, I noticed that the there seemed to be two kinds of young married people that I worked with. Those who were constantly trying to borrow money to tide them over between monthly paydays; and a few who always seemed to have a few extra dollars to spare. The difference was, they lived in "trailers". That got my attention.
Over the years when I've surveyed seminar classes to see who liked managing real estate. Invariably, only a few hands have been raised. This continues to puzzle me; particularly when it seems the biggest source of concern for those same people who would like to become real estate entrepreneurs is that they can't find financial backers. In the final analysis, I think that people completely misunderstand the function of a real estate manager, and the entrepreneurial advantages being able to manage offers.
In football, the defense keeps the other guy from scoring, but the offense scores the points that win the game. In prior issues, I've been concentrating our efforts on minimizing the effects of Y2K on our personal, professional, and financial lives. Now, it's time to see if we can't put some points on our financial score board so we can wind up winners by the time the millennium bug has run its course.
Last month, we focused on maintaining personal family lifestyle. This month, we want to take a "world view" to consider the effects of Y2K on people in other countries and on the world economy. Writing a newsletter about a future world that nobody really knows about is tricky to say the least. First one should have a grasp of the way things are supposed to work under normal circumstances. From there, departures from the norm caused by the millennium bug can only be guessed at. And to add insult to injury, we have to extrapolate the effects of these changes from the norm and the most productive response of our readers to them.
If you took the advice presented over the past two years in these letters, you may have had doubts about liquidating marginal investments, finding safe places by which savings could be protected, stocking up on food, water, and supplies, home-schooling your children, and making provisions for maintaining a secure and safe lifestyle for yourself and your family. The next 12 months will tell you whether or not you were correct in making these preparations.
Happy Y2K! This letter is being mailed out in mid-December along with all the other newsletters due as promised to you for the next year because at this point it is impossible for me to guarantee that all newsletters will be delivered in 2000. This is the only way I can think of to meet my obligations to you to fulfill the subscription you paid for in advance. I think it would be extremely unethical for me to accept the trust you placed in me by your advance subscription payment, then to use the Millennium Bug as an excuse to deprive you of what you've paid for.