All Forum Posts by: Account Closed

Investing is a personal matter.

Prior to the Internet, I would browse the personal finance section of the public library and local book store. Now the Internet is my library and Google is my card catalog.

Try local meetups (including those where the RDPD Cashflow board games are played), the PBS show wealthtrack.com, various information on YouTube (such as Warren Buffett speaking on CNBC or anywhere else), and personal finance blogs (see the BP Money Podcast shows for ideas, such as Mr. Money Mustache and The Mad FIentist).

One resource will lead to many others and you'll zero in on the style of wealth building that's ideally suited for you.

Back in the 1990s, the joke was that if you wanted to know what your SF Bay Area house was worth in 1997, look up what it was worth in 1988. Between those years, home prices in coastal Northern California dropped 20% for a time after the Cold War ended, military bases were closed, and defense industry funding was cut back.

One way to tell if there are inventory shortages is to look at the types of mailings from real estate agents. Instead of the impersonal postcard, these mailings turn into individualized mailings with a photo of your house and a list of recent sales in your area, along with a warm letter of why this agent is the right one to consider for selling your home. Some agents in 2014 even started offering free how-to-sell-your-home seminars with a catered lunch.

I got these mailings in the late 1980s, late 1990s, and early 2010s. One mailing in late 2014 pointed out that for the previous ten years, there were an average of 5,000 homes listed for sale in Santa Clara County. At the time, the letter pointed out only 500 homes were listed. My real estate agent confirmed the number of Santa Clara County listings in early 2015 was under 1,000. Inventory shortages are good for the homeowner who is motivated to sell.

FYI -- Coastal California is doing well, but Central California not so well. There are proposals to break California up into smaller pieces (six smaller Californias in 2014, which didn't go anywhere, and three smaller Californias in 2018, https://www.cnn.com/2018/04/13/us/california-closer-to-split-into-three-states-trnd/index.html). I'm not sure what the impact on the housing market will be if any of these proposals ever go through. 

The book Think and Grow Rich by Napoleon Hill, which I discovered by accident when I was in my 20s.

Regardless of the asset, there are no bad investments. There are only bad prices.

Warren Buffett says he is greedy when others are fearful and fearful when others are greedy.  History seems to confirm his approach:

Stocks (1979, at their bottom): The Death of Equities

Real estate (2005, at its top): Cuckoo for condos!

There's a humorous media battle going on between California and other states to attract California companies (California Vs. Nevada [2009], https://www.youtube.com/watch?v=RLJtf3vWRPU).

I lived through several painful downturns and the area does bounce back. The job count comes back strong, but the technology and required job knowledge changes. "Silicon" Valley is a misnomer now because there are no longer any fabrication plants there making the silicon wafers.

When I moved there in 1979, suburban homes had replaced the orchards and farm workers couldn't afford to live there anymore. Today the latest-tech workers are driving up home prices and forcing out the non-tech and obsolete-tech middle class workers like myself (I got my engineering degree using the slide rule because electronic calculators hadn't been invented yet).

I'm OK with that change. My house sold in 8 days as is with an all-cash offer that was almost double my asking price. It didn't take me long to get used to Pensacola's high humidity and lack of traffic.

Like others on this thread, I'm one of the ex-California statistics. I moved to Silicon Valley in 1979 for the tech opportunity and owned a home in San Jose (Rose Garden Area, 95126) from 1982 to 2015. 

I sold my home for several times what I paid for it. The apartment I'm renting in Northwest Florida would cost three times as much if I had stayed in San Jose and four times as much if I had moved to San Francisco (this comparison analysis was done three years ago).

With no letup in home prices, the California exodus surges

I need to remember that real estate doesn't work this way in other areas of the country.

That's what creates markets. One person's trash is another person's treasure. When the deal is done, both sides of the transaction are happy because each side believes it got the better deal.

Another factor to consider is one's tolerance for risk. The use of leverage (borrowing at a low rate and investing the money at a higher rate of return) helps when times are good. But leverage is a double-edge sword that hurts when times get bad. The payments on the loan must still be made, but the income from the investment may have declined (vacancies, lower rents from a slower economy, and so forth). It's all about seeing who has been swimming with a too-low margin of safety when the tide goes out. 

Think about a low-cost index fund as a proxy for investing in the entire economy. Warren Buffett calls it "extreme diversification" and recommends most investors (including professional money managers) take this approach.

I use the CORE and EXPLORE approach. Money I can't afford to lose is in my CORE portfolio (a diversified basket of low-cost index funds [also called "asset allocation"]) and the Dividend Aristocrats mentioned above. Money I can afford to lose, but don't want to lose, is in my EXPLORE portfolio, such as crowdfunding, options trading, and real estate finance (note investing).

My Dividend Aristocrats were in my EXPLORE portfolio when I started out. But they are now working successfully, so I consider them part of my CORE portfolio. My goal is some day, the investments currently in my EXPLORE portfolio will become part of my CORE portfolio as I become competent in managing them successfully.

I also owned a home once (33 years) and glad to have had the experience. Owning a home has its rewards, but it's also a full time job (which is how I know I would not enjoy managing rental property). I'm not sure if I want to own another home again, but the possibility remains on the table.

My only regret is not starting to invest when I was in my early 20s. Looking back on my life, the opportunity was there right under my nose and I ignored it. But rather than playing the coulda, shoulda, woulda game with myself, I just suck it up and move on.

My landlord accepts personal checks, but not cash. Once a personal check bounces, money orders are required from then on. There is also an online payment system that charges a small convenience fee.

Rent is due by the first and late by the fourth (no exceptions for holidays). The leasing office has a dropbox for after-hours rent payments.