That's an interesting take Marc,
These are Condos in San Diego. They have HOA fees etc.. Those fees are constantly changing. I would never have paid the prices they are selling for now. They would barely cash flow at these inflated prices. The return on equity currently is less than 3%. That is unacceptable. The only reason I purchased them originally was to eventually replace my W2 earnings as a teacher. I teach in the daytime at a catholic school and at least two nights a week at the local community college. I wasn't making enough W2 earnings. Soooooo, appreciation was just an incredible benefit that happened. I love teaching, but I just turned 50 and want to first replace all my w2 earnings and then far surpass those w2 earnings and then keep deferring taxes with the 1031 exchange and leave a significant economic legacy that my child could continue if he chooses. I just read Brandon's article on the 1031. It is amazing and clearly explains my defer, defer, defer, defer, and die strategy. The 1031 exchange is a phenomenal tool to build wealth and if you combine that with Multifamily business model and your clearly understand that apartment complexes are valued based on NOI and not comps, you can find high cash flowing properties that will give you 10%-20% cash flow and at the same time increase the NOI and at the same time increased the value approximately 10X the increased NOI.
My 3 rules now are 1. Never lose money 2. It must cash flow. 3. You CAN'T get rich slowly. 10 years from today, I own $50,000,000.00 in total value of all my real estate and $16,000,000.00 in net worth. At the same time I will be cash flowing approximately $1,000,000.00 per year. What happens if I don't reach my goals and only reach half. $25,000,000.00 in total value of all real estate and 8 million in net worth and $500,000.00 in annual cash flow wouldn't be bad either. Albert Einstein once said, " reality is merely an illusion, albeit a very persistent one." My ladder was leaning against the wrong wall and I have moved my ladder against a new and improved wall. As I said earlier. If a lowly paid Catholic School teacher can do this, anyone can.
Education and learning from successful people that have already been down the path you are traveling is a sound way to approach you financial future. I never take advice from people that have less money etc... than me. I mean financially that is. Right now after 4 short years, I have 4.5 million in real estate and 2 million in equity or net worth. I take financial advice from people that have a lot more than I do.
Take care,
Swanny
