Are You a Buyer or Seller: I’m Both
April 2017
Sophisticated Owners are always on the alert for the opportunity to profit, whether that means buying or selling. Why is that? Because the whole point of owning real estate is to make money. You wouldn’t run a Doctor’s office for free, or a grocery store. Likewise, investment real estate has to make money to justify all the work you put into it, and sometimes that means buying or selling.
Why? Can’t you just hold forever? You can, but two things will happen: 1. Over time you’ll get less leveraged, more of your net worth locked into one location, less depreciation deduction in an older and older building over time, and 2. You’ll miss golden opportunities to increase your wealth along the way.
As time goes by, real estate loses value relative to the real estate market as a whole unless you’re lucky, work hard, and in some ways, you just lose regardless.
Here are some ways:
• Your sub-market has to outperform others
• You have to constantly rebuild your asset as it gradually falls apart
• You have to put less money in than the rents but not let the property deteriorate
• You have to be vigilant and catch problems like dry rot before they destroy your asset
• You have to raise rents
• Your tax depreciation runs out and you can’t stop that
Against this backdrop of decline relative to other opportunities we as owners can make the choice to consider those other opportunities.
Here are some examples that will change the entire trajectory of your wealth and your real estate business over time:
• In every market, there is a point at which values are high relative to income. This is a point at which to hoard cash, refinance and keep the money, sell and pay taxes if that’s your long term plan, sell and trade into a different part of the country or a different product class such as Net Leased.
• In every market, there is the reverse point at which values are low relative to income. Buy. Find a way.
• Maybe most important, in every part of every market, that means this can happen right now, anytime, opportunities to sell at a high price or buy at a low price come up. This is much better than timing the market because it’s famously difficult to time markets. Just look for deals and be willing to sell if you get a high offer.
The last part requires being in touch with a couple of good brokers. That’s were we come in.
Call me for an Estimate of Value on your property.
Let’s make it happen. 510-919-4919

 

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