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Risk is the Enemy - Greenspan is the Devil A couple of months ago the Stock Market did a major overnight Swoon.... Alan Greenspan said the "R" Word .... Recession * The Chinese stock market tanked while we were sleeping * 416 points fell right off the Dow Jones * AND all the other major stock indexed tumbled in unison Bottom line is $583 Billion in wealth evaporated in a single day - in the US alone, because of one retired government official saying one word. Despite this overnight meltdown, your investment advisors probably tell you that stocks and bonds are much more risky than direct Commercial Real Estate Investing. Try telling that to the people who lost half their net worth in the Dot-Com crash. It is a great reminder of why you have to invest a portion of your portfolio in Real Estate and NOT stocks. Let's count the ways. *You Can Calculate Profits Before You Buy* When you buy at the right price and execute on your business plan, you know what profit you will make when you buy. You can research property values, expected rents and all the other variables involved and get a very good idea of the price you can sell at given the increase in cash flow you can force. *Cash Flow - Your Favorite Sleeping Pill* Your cash flow doesn't depend in the least on what anyone says about "Recession" or "Deflation" or "Inflation" or anything else that ANYONE might say about the markets in general. The cash flow depends on things you can know about and are pretty darn fixed - rent, mortgage and fixed expenses. And many of them you can improve to drive appreciation of the underlying property IN ADDITION TO your income. *Leverage Baby Leverage* For every $1000 you need to buy a property, you only need $200 in cash and it doesn't even have to be yours. Imagine asking your broker to sell you $1000 in stocks for $200 in cash ... they would just shake their heads and laugh. Yet you can bring $200K of your investor's cash to a deal and buy a $1M piece of investment property any day of the week. *Save Taxes with Depreciation* Name me any other investment that can get you a tax write off year after year - for decades mind you - while it goes UP in value. You have to love Depreciation. Compare that with Mutual Funds where you might even owe taxes in years where the fund lost money. That's a real safe investment all right. So just remember all the benefits of Commercial Real Estate Investing as you take on the tasks of looking for the right property for your portfolio. Your patient due diligence will be well worth it. Forget about Greenspan and how much the Dow Jones fell that day. Remember you depreciation, your leverage and your cash flow and put on a grin like the Cheshire Cat. And at night, when you are ready for bed, you can forget about the market's ups and downs and sleep well knowing your assets are in real estate.
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