REMEMBER – REAL ESTATE VALUES MUST RISE; DOLLARS MUST BE CREATED & RECYCLED; OUR ECONOMIC SYSTEM DEPENDS ON CASH-FLOW FROM BLOATED REALTY VALUES, EASY MORTGAGES, OTHER EASY FINANCING, & GOVERNMENT ‘PUMPS’ (WHEN NEEDED), TO MAKE THIS “CONTRIVED FICTION” A REALITY – OVER & OVER AGAIN.
Excerpts From The Book
The Federal Government cannot permit “prolonged” or permanent downturns; not if there is anything in its power to prevent them. Today our economy is well beyond the chance workings and evolution of natural or innate market systems. The days when market dynamics were driven purely by factors of supply and demand, or steady market growth (& valleys), or by any notion of the ebb and flow of prosperity, (as if these were self-fulfilling norms), are ancient history.
Today our System is akin to an “Inevitable Predestination”. Not Biblical or Mystical. Not Fatalistic. But perhaps something just as Powerful or, in our lives, even more Powerful – that is to say, THE DYNAMICS OF TODAY’S “ECONOMIC SYSTEM” =’s THE WANTS OF A PEOPLE, PLUS THE NECESSARY ROLE OF GOVERNMENT IN MAKING THINGS HAPPEN. “Real Estate Booms And Busts”, the Cycles of “Boom To Bust To Recovery”, the Path to the “New Bubble And Boom”, and round and around, are nothing special. Which areas of life and nature do not have their own innate Cycles? Or Cycles, may we say, which have become more pronounced, or exaggerated, by the Hand of Man? The ups and downs, the rise and fall in real estate values and activity, have become much too important a component of the National Bloodstream, to be left simply to chance or the purest workings of the marketplace.
IT IS FUNDAMENTAL AND CRUCIAL TO RECOGNIZE THAT “EQUITY SUPPLEMENTS” FROM BLOATED REALTY VALUES MAKE OUR ECONOMY TICK; THE PURCHASE AND SALE OF REAL ESTATE, NEW CONSTRUCTION AND EQUITY-DRIVEN REFINANCES ALL PULL MONEY OUT, THEY ALL CREATE DOLLARS, AND THIS MONEY IS THEN SPENT AND LEVERAGED, RESPENT AND REINVESTED ELSEWHERE AND EVERYWHERE ON REAL ESTATE AND NON-REAL ESTATE GOODS AND SERVICES, ALIKE.
REMEMBER: MOST REAL ESTATE EQUITY IS AN ARTIFICIAL INFUSION OF CAPITAL INTO THE ECONOMIC SYSTEM WHICH SUPPLEMENTS BASIC EARNINGS AND NON-REAL ESTATE SECTOR BUSINESS AND INVESTMENT PROFITS.
THE MOVEMENT OF MONEY FROM (BY VIRTUE OF), BLOATED REALTY VALUES (BUYING, SELLING, CONSTRUCTION, & EQUITY REFINANCING), MAKES THAT HUGE PORTION OF OUR ECONOMY, COLLECTIVELY CALLED “THE REAL ESTATE TREE” PROSPER. High values and easy financing enhance activity and cash flow up and down the line. This is the line which feeds the masses. It keeps so many so comfortable in their seemingly endless pursuit of those oh so many comforts and must-have “extras”, and for others it provides the bare essentials.
YOU MUST INVEST & SPECULATE – IN YOUR HOME & OTHER PROPERTY – TO HOLD OR TO FLIP
Why? Why invest, or speculate, in bad times or even during good times, with all the negative talk about how real estate has already “permanently” peaked, how it can just no longer climb in value by the leaps and bounds that we have seen in the past? There are, quite simply, Two Important Answers to this question: First, there is that strong body of Traditional Reasons To Invest And Speculate. Gains, Growth, “Advantages”, and Tax Breaks (Profit Areas). In addition to family-related and other personal non-pecuniary motivations, there are overriding, indisputable Basic Rationales for Prudently Dealing in Real Estate, both for the Short and Long Terms. (“Yields” will be discussed later in this Chapter.) Secondly, the shrewd purchase and resale, or retention, of real estate, particularly where you try to Capitalize On Market Upswings In Bust-Recovery-Boom Cycles, will additionally lead to huge rewards.
BUY LOW, BUY RIGHT (& SELL HIGH); WHEN BUYING / SPECULATING IN REAL ESTATE AND OTHER ASSETS, A CERTAIN PROFIT MUST BE BUILT-IN, UP-FRONT, AT THE TIME OF PURCHASE – BE YOUR PLANS TO HOLD OR TO FLIP, FOR THE SHORT OR LONG TERM, FOR PERSONAL USE OR BUSINESS GAIN.
As alluded to earlier, there are essentially FOURTEEN TRADITIONAL BASIC CATEGORIES OF GAIN AND GROWTH WHICH CAN BE ACHIEVED THROUGH THE LONG AND SHORT TERM HOLDING OF REAL ESTATE.
No matter what the current market may be, regardless of what the immediate trends may be, the bottom line is there has always been, and there will always be, a Great Deal of Money to be made in Buying and Selling, Holding, Fixing, and Renting, Foreclosures.
Buying The Property, Buying The Paper, Making Deals at the Right Time with other lienholders, Discounting, Going to Sale with or without the Paper; it’s all a bit of a Chess Game. But Get Some Knowledge, Buy Something (Buy Low, Buy Right), Find Some Paper, Get the Comps, Think, Do, Maneuver, Add in Some Creativity, and You Will Be Able To Turn Many Seemingly Marginal Situations or Dead End Deals, into Windfalls that the Other Guy Could Never See; Profitable Deals may jump out and hit you in the face, or they may be hidden puzzle(s) waiting to be thought through by the Right Buyer with the Right Knowledge and Savvy.
From Locating A Prospective Deal Through Closing. What Is Important Is That You Have A Conceptual Understanding And A Functional Knowledge Of The Game.
Boil it all down. Go back to the Basics. That is the starting point. What are you After? The Overall Goal(s) – Buy Low, Buy Right. The Built-In Up-Front Profit. The Yields And The Possible Additional Cyclical Appreciation. The Goal Is To Get This Thing, To Get Into A (Right) Contract, To Control It, To Use It, To Grow It, To Benefit And To Profit From It. Caveat – In Doing The Initial Assessment, In Order To Get That Gut Feeling As To Whether This Is A Potential “Buy”, To Determine If There Really Is Something To Negotiate Towards, you must do more than run your numbers and know the comps. You must be able to see the True Value and the Forms of Profit or Yield. You must also Look Inside and Look Behind and Beyond in your own Analysis, any documents and paperwork which may be presented to you to “assist” in your evaluation.
A major consideration in Structuring A Deal is the Method, or Form, of initially and subsequently Holding the real estate or, sometimes, more precisely put, of Facilitating a buyer’s Interest in a piece of real estate. The Form of Holding Property Rights (ownership, etc.), Interests, or Proprietary Rights in real estate, be those Rights purchased or otherwise acquired, carries strong implications vis-à-vis the most basic matters which go to the very heart of a Deal and the Future Use and Benefits of the Property. A Host of Matters are impacted by the Form of Holding, including Both Speculative and Investment Aspects; Expectations; Goals or Plans; and Structuring.
The Anticipated Benefits, the Underpinning of a Venture Itself, can be magnified or dissipated based on the Form of Holding. And the ease or difficulty of Dealing, Managing, and Other Matters, are similarly affected. There are essentially Eight Categories of Concern, or Facets of Real Estate Investment, which are impacted by the particular Form of Holding in a given transaction.
Again, The Actual Forms Of Holding Real Estate, Or Interests In Real Estate – i.e., Rights, Entitlements, Scope Of Ownership, Proprietary Interests – Are Diverse, And Each Of These Forms Has Its Own Unique Relationship To The Aforementioned Eight Facets Of Real Estate Investment. (Caveat – It Is Vital To Understand That Certain Methods Of Financing Are Defined By, And By Their Very Terms Are In Fact Sometimes Actually Forms Of, Holding.)
Buy Low, Buy Right; Knowledge Is Power, Cash Is King, (And Credit Is Co-King); Find That Good Deal; Understand the Potentials of Real Estate; Learn The Business; Learn How To Structure The Deal; Remember – If You Cannot Put It All Together “What Is The Sense Of Hunting Down A Deal In The First Place?”
Any Form of Physical Rehab Or Renovation, And Any Tinkering Of A Legal Nature, can carry Great Promise.
And In Either Approach The Questions Ring: “Should The Real Estate Be Left Essentially In Its ‘As Is’ Condition? Should Something More Be Done With It – Legally & / Or Physically – To Enhance Its Potential Or Utility, To Best Maximize Its Profitability, To Follow Through On Any Original Vision, To Convert It To That Thing Of Extra Special Value Or Utility (Which Transformation Will Really Make The Deal A GOOD DEAL?”) Not every Purchase lends itself, optimally, to an “as is” post-closing afterlife.
The Threshold Question Is: “How, If At All, Should The Investor Either Rehab, Renovate, Or (Re)Develop His Property?” The Broad Issues For Consideration Include Making Primary And Overall Determinations As To Best Uses, General Utilization, And Strategy For The Property. “Should it be left basically ‘as is,’ with perhaps some clean-up? Is a modest Rehab, or a more superficial fix-up, in order? Or can or should the property be Converted And/Or Otherwise Improved To A Higher And Better Use, Legally &/Or Physically, In A More Substantial Way?” That Is The Key Question.
Again And Again, To Reiterate: Create Wealth – Buy Low, Buy Right; Try To Avail Yourself Of Market Cycles; Try To Capitalize On The Upswings; Avail Yourself Of The Basic Core Gains And Yields Of Any Sensible Speculative Or Longer Term Investment; And Know How To Take Whatever It Is That You Have, However Much Or Little, Do Those Physical And/Or Technical Legal Things To That Property; And Make It All That It Can Be, And, With Foresight (Chapter X), Manage And Maintain, In A Businesslike And Intelligent Fashion, Whatever It Is That You Bought And Perhaps Embellished, If You Are Holding For The Longer Term As Opposed To Flipping.