2002 – the numbers stopped working to purchase the 2 to 4 unit properties I was focussed on – from 2000 to 2002 rents were rising so it was possible to believe that rents would eventually cover the negative cash flow from a property purchased during that timeframe (and/or the monthly expense could be covered easily from other income sources like a job)
in 2002 it was no longer possible (for me anyway) to pretend that buying multi-unit property made any sense – I began researching economics, investing and financial manias at that point – as it dawned on me that I was speculating in the local market and NOT investing, I began selling my property
(in simple terms, if you are writing a check every month to support your ‘investment’, or you won’t actually ever own your ‘investment’ because you aren’t paying down principle, you might want to research the difference between investing and speculating)
the ‘crash’ that I have been expecting since 2002 arrived in the summer of 2007 with the two Bear Sterns hedge funds blowing up – unfortunately for us these funds were just the tip of the iceberg – we have been seeing more and more of the ‘berg over the last six months with investment banks writing off billions in losses – I believe the bulk of the iceberg is still being hidden below the waterlines in the form of $500-700 trillion of derivative paper that isn’t worth what the book-keeping ledgers say it is worth – the bailout of the monoline insurers is an attempt to keep the iceberg from rising higher out of the water – many more bailouts are coming our way
