I am by no means smart money but have done pretty well for an old surfer with no formal business education (luck played a big part in that as did dumb persistence).
I am completely out of real estate, after being in it for more than 30 years, except I paid off my $ 2 Million McMansion (because I intend on living there for a long, long time – we love where we live) and am looking for alternative investments to place a lot of cash.
It’s a very difficult “shift” out of something I have always known into an arena with so many choices. I am overwhelmed sometimes by the uncertainty and conflicting views on various investment vehicles. Growing older has taught me to be pretty conservative, yet at the same time that type “A” personality always pushes me into thinking that I should be doing “something” instead of just waiting.
I keep thinking I should stick with what I know (real estate) but I can’t find any opportunity in this market, anywhere (commercial, residential, industrial, etc.) Honestly, nothing looks good because it is all so overvalued (in Southern California anyway).
And all the folks I have worked with over the years aren’t finding any opportunity either. You know things are going south when you get phone calls asking “You finding anything good out there?”
Equity underwriting is changing dramatically and is getting far more conservative, meaning the risk is increasing daily (or the perception of it anyway).
Your smart money friend is absolutely right. Patience will rule the day. The last time this happened (a market compression), I remember meeting a really nice guy from Canada who came down to San Diego to look for opportunity in a failing market (early nineties).
He waited and waited and looked and looked and then jumped on hundreds of finished lots that had gone into foreclosure and made an absolutely screaming deal from the bank.
He sold those lots in a closed bid situation to several builders about five years later (too “early” according to him) for about $ 60 Million in profit. (I figure his investment was less than $ 3 Million).
I remember as a kid my father always telling me that big money was patient and quiet (like a leopard stalking its prey). I guess I should just kick back, wait it out and go sailing for the next few years and then when the behemoths start to move, just follow their lead and go for one more round.
Staying in cash and losing to inflation for a few years while patiently waiting until we bottom out, and then buying again as the market starts to improve is probably a pretty good strategy. The only problem I see is it may take several years for this market to go through its cycle and I’ve got the “jumpies” already. I feel like a third grader waiting for recess…
