Be Afraid Be Very Afraid
Should you be afraid of the massive collapse of the 5th largest investment firms in the world? If I were you I would be, this is just the tip of the iceberg, now there are concerns about Lehman Bros (#4) it seems as if only the strong will survive. This should be a wake-up call for all that are so content on someone else to control their destiny. Only in America can someone ride in on a subway and give advice to someone that comes to the appointment in a Rolls Royce.
This time last year Bear Stearns was valued at over $150 and was one of the darlings of Wall Street. This was a true Blue Chip stock, and is not a fly by night Internet Company, Bear Stearns was started in 1923 and supposedly had revenues of 16.151 Billion in 2007. If you can’t trust Bear Stearns whom can you trust?
This year they are being bought out/salvaged by JP Morgan Chase for the absurd amount of $2.00 a share, think about this penny stocks trade higher than this. What makes this so amazing is that they own a building in New York that has a book value of over 1.2 Billion dollars. This is a real bailout; the Federal Reserve Bank of New York has provided temporary funding to just insure JP Morgan that they do not have to take the entire bag of debt by themselves.
The reason I was so adamant about giving these details are because I talk to individual daily and they are so afraid of something bad happening, or the fact that if they invest in Real Estate something can go wrong, the value can drop, the tenants may not pay, these are all possibilities, but think about it from the perspective what if they do pay, what if the value increases.
Now you have the chance to truly be in control of your life, not having to depend on your financial advisor to control the chance of you having a great retirement. Robert Kiosaki/Donald Trump wrote a book recently called “Why you need to Be Rich” it has references to situations like this happening and that we had better learn that we need to become more self-sufficient and stop leaving our lives to someone else to manage. Robert Kiosaki is worth over $75 Million dollars and has sold over 26 million books, no need for me to talk about the numerous accomplishments of the “Donald”, but I think he knows a thing or two about Real Estate.
If you were heavily invested in Bear Stearns today where would you be, after the realization that you have a worthless stock you will have two ways to go, you can accept the fact that you have lost it all and complain about it or you can do like the minority and accept the fact that it has happened and do something about it. “What” is the operative word, I believe that if you can see, feel and touch something it has a value to it. In most cases if you purchase something that is intrinsic value you can at least salvage somewhat of the investment.
My area of expertise and passion happens to be Real Estate, with a specialization in Commercial Real Estate; I have established a full service company that can train the novice, to the more experienced investor that may have aspirations of going from the more known and better understood world of Residential Real Estate investing. I cut my teeth buying and selling single family homes and it was a very profitable endeavor for me.
To me I knew that if I could learn the basics in Residential Real Estate, my ascension to the more profitable world of Commercial Real Estate would be easier and I would have a smaller learning curve. In this volatile world of the Stock and Equities market, my Real Estate has actually increased in its profit margin, at times when the interest rates were low and the lending criteria was relaxed I actually had to work to fill my units, in some cases it was less expensive for a renter to own than it was for him to rent.
Now the climate has changed, the lending criteria has regressed almost 20 years, I have been in this industry for over 10 years and I have never seen the lending criteria this tough. I have an influx of clients looking to do leases with the Option to buy or clients that have had a loss of income or loss of a home do to a foreclosure, that are begging me to find somewhere for them to live. So to me, the business of Real Estate is on its way up, not down as we see it.
We are just weeding out the weak, when I started in this business, it was done with a long term plan, I understood from the beginning that if I could just weather a few of the storms, the first was the learning curve, and then it was the nay-sayers, I would be OK. I have and still feel that Real Estate if purchase correctly, will give you a better chance for long term success. In closing, a wise man once stated to me that we can create a lot of stuff, but land is not one of the things we can readily create.
Darrick Scruggs
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