I’m still concerned about all the retirement account money that’s invested in the stock market. As a former stockbroker with 22 years as a Top Producer at Smith Barney, Shearson and Prudential, I gave everyone a buy signal over 6 months ago because I believed the market was overpriced and would adjust because of the Sub Prime market collapses . I told everyone to liquidate any money that you had invested in the stock market. That included all Mutual Funds that may have all or a portion invested in U.S. Stocks. A few people took my advice and liquidated. They paid their taxes and invested in Real Estate. Without exception THEY are all happy. Those that didn’t sell are biting the bullet. Perhaps the reason you didn’t sell is because your stock broker told you a story about the coming rally, buying opportunities, DOW going to 15,000. or some other nonsense. Stockbrokers don’t lie intentionally because they really don’t have a clue what the market will do the next day. Nobody does. But they do know that they are judged by the amount of assets they have under management and they don’t want to give up any client or any managed money.
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All successful investments begin with a plan and action steps designed to support your objective. The more time you put in to finding the right investment the more experience you’ll get and, like all other things in life, you will get better at finding the right investment opportunities. Making mistakes is part of the process because there is no perfect process or perfect investment. People are different, investments are different and results vary over time because markets shift and what worked yesterday might not work the same next time. So, being adaptive and flexible is important when searching for the right place to invest your money.

Looking for a growth area in Real Estate is no different. I will share with you the way I look for undervalued markets so that you can mimic me or use my experience as a resource to add value to whatever you’re doing. My initial goals are to locate areas of the U.S. where growth is almost predictable because certain infrastructure investments have already been made. Growth areas are identified by new roads or widening existing ones to handle increased traffic. Usually the growth areas are suburban as an established and aging community finds its citizen looking for better schools, better shopping and newer recreation facilities. Corporate America also searches for urban flight and growth to determine where they are going to expand and build those new Super stores. County governments usually lead the way by identifying urban areas that are primed to grow and fund newly created Redevelopment areas that will include new roads, freeways, industrial parks, schools and master planning to attract major retailers and businesses. In looking for growth that will support my 10% property appreciation objective, I am a follower not a leader. Corporate America and local governments determine what will be and create those growth markets that I seek.
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Don’t believe the hype. The more depressed that the real estate market gets, the more the promoters come out from under the woodwork, under their rocks, or wherever they have been hiding, to pitch their expensive—and unrealistic—plans and programs about how to get rich in real estate through foreclosures, probate purchases, and fixing and flipping. In this post, I want to share with you why the first two approaches make money for nobody but the people who run the seminars. Unless you’re as handy at carpentry and plumbing as you are at pulling permits and using a calculator, fixing and flipping is another way to turn your savings into dust. I’ve been at this a long time—long enough to see countless well-intentioned people burned because they thought they could steal a bargain at foreclosure, identify a lucrative piece of property in a probate sale, or buy a fixer-upper, make it salable, and make a killing. These approaches simply don’t work, and I want to show you why.
First let’s talk about foreclosure.
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It seems like we are becoming a country that depends more and more upon the Government to solve our problems even if the government is the source of those problems. Take, for example, the IRS collection of taxes on income, capital gains and estates. Although the tax rates and exemptions change for political exposition, they do not seem to go away. Although the tax rates change depending on whether the gain is short term or long term, most real estate investors deal with the latter. So, when an investor owns property for a period of time and the value of the property increases, they like to trade it in for different property much like trading cars when the new models look so much better. The problem with selling is the creation of a tax obligation based upon the profits generated over the term of the investor’s ownership. The gain may be greater based upon the length of time and the depreciation schedule used during ownership.
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The most popular retirement account results pales in comparison to investment real estate. To understand why the actual results are higher in real estate it’s important to know the reason. First is that OPM factor. In a good employer sponsored 401K the employer matches the employees contribution by 100% with numerous restrictions. In investment real estate the investor puts in 10% of the purchase price and the lenders put in 90% or 9 times what the investor puts in. Tax benefits are also greater in real estate. In a retirement account the government lets you defer the income tax that would normally be paid currently until some future date. In real estate you get tax savings including write-offs for mortgage interest, expenses and depreciation. These benefits can actually lower your current tax obligation
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