Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Monday, February 7, 2005: Winter
in Phoenix. 70 degrees and azure blue skies. Affordable housing, despite a three-year
boom. The outdoor life. No wonder the world wants to move here. We're at the
Phoenix Civic Center which today is hosting the Arizona Real Estate Investors
Association (Azreia) meeting, the reliv Opportunity Meeting and the AZ Sunrays
Hard Rock Gymnastics Meet. The place is crawling with entrepreneurs. It's my
Joe Pennino, a reliv "ambassador" approaches me:
"Have you heard about reliv?" he asks.
"No. What is it?"
It's a shake, a nutrition supplement. We says it's nutrition made simple, life
"Is it any good?," I ask.
He answers "It's changing peoples' lives. It's changed mine."
Shakes, real estate investing and gymnastics. All changing people's lives. You
can feel the palping enthusiasm.
Azreia, the real
estate convention, itself is crawling with around 1,000 people turned off by
the stockmarket and turned on by real estate. Everyone is taking their saved
nickels and putting them in everything from about-to-be foreclosed homes, to
small office buldings, to strip shopping centers. All bubble with their positive
Serving the Arizona real estate boom is a plethora of suppliers offering some
seriously neat services, including:
+ Professional home staging. Before you put your home on the market,
bring Bonnie Lewis in to stage it, i.e. temporarily enhance it with new paint,
new floors, new furniture. She can fill an empty house with furniture in two
days, a few days longer if it needs some painting, carpet and tile. Services
she offers include neutralizing, de-cluttering, accessorizing, decor updating,
accent painting and furniture and accessories rental. A recent job gave a home
seller a 46% return on her cost -- i.e. her work secured a higher sales price
and shorter sale time. For some before and after photos, click
+ Foreclosure buyer. Joe Cook of the Focus Real Estate Group buys foreclosed
properties by the ton, then sells them to people who fix them up and sell them
to end-buyers. The big service Joe performs is that his people check the properties
and only buy ones they feel are sufficiently below comparable market prices
so as to allow his buyers the margin to fix-up and a profit on sale.
+ The zero interest lender. His idea: "Have you found a house
which is a good opportunity to flip? I will give you the money at zero interest.
We share the profits. Your share 80%. My share 20%. Call Art 480-234-2300."
+ Put real estate in your IRA. Roll your 401(k) into an IRA. Here's a
typical story. Man goes on vacation, discovers dream retirement home. He has
no money to buy it, but his 401(k) does. Roll it to an IRA. Sell the stocks.
Get his IRA custodian to buy the home with the IRA as the owner. Later he makes
improvements to the property with monies from his IRA and rents the house out
for income -- all tax-deferred -- until retirement, when, presumably, he'll
be paying less in taxes.
+ Syndication for investors of smaller properties. Several companies will
find, buy, rent and manage your homes, office buildings and shopping centers.
The service offers out-of-towners a return on their monies without the aggravation
of collecting rents, etc.
Some lessons I
+ Real estate prices in Maricopa County (includes Phoenix and its neighboring
towns) are frothy. The professionals are beginning to get worried. The big,
easy money is gone, for now.
+ The "facts" in the sales material are often wrong. In a frothy
market, people don't check. They should.
Item: An apartment building up for sale is reputed by its owners to have a new
roof. The sales agent produce an invoice for the roof which they paid and billed
to the owners. The invoice is low. The potential buyer checks, finds no new
roof. The roofer took the money, never installed the new roof. The managing
agent never checked that the roof was installed.
Item: A couple own an office building. They're divorcing. They need to sell
the building. The husband's business is a 50% tenant. The broker says the husband
will stay. When questioned directly, the husband says, "Hell no."
Item: Square footage is real estate's key number. What you read in the sales
brochure and the actual square footage will often differ by a big amount, especially
in sellers' markets.
+ Most auctions are rigged. That includes real estate, art, antiques.
As a seller you'll get less. As a buyer you'll pay more. How much? Depends.
Start with the assumption that they're rigged and go from there.
+ Comparables count. You need to know comparable prices. Most are available
in databases you can search (for money). Some database services are good. Some
are great. And some are useless. Important to check.
+ Insiders are preferred. If you're not an "insider," you
won't see the best properties or you'll pay more. Becoming an insider is not
difficult. Just hard work.
More on Arizona real estate -- Personal Real Estate Investor Magazine,
which I now am chairman of. For more, click
women really smarter than men?
On their wedding night, the young bride approached her new husband
and asked for $20, for their first lovemaking encounter : In his highly aroused
state, her husband readily agreed. This scenario was repeated each time they
made love, for the next 30 years, with him thinking that it was a cute way for
her to afford new clothes and other incidentals she needed.
around noon one day, she was surprised to find her husband in a very drunken
state. Over the next few minutes, he explained that his company had gone through
a process of corporate downsizing, and he had been let go. It was unlikely that
at the age of 55, he'd be able to find another position that paid anywhere near
what he'd been earning, and therefore, they were financially ruined.
Calmly, his wife
handed him a bank book which showed thirty years of deposits and interest totaling
nearly $1 million. Then, she showed him stock certificates issued by the bank
which were worth over $ 2 million, and informed him that they were the largest
stockholders in the bank. She explained that for 30 years, she had charged him
for sex and these holdings were the results of her savings and investments.
Faced with evidence
of cash and investments worth over $ 3 million, her husband was so astounded
he could barely speak, but finally he found his voice and blurted out, "If
I'd had any idea what you were doing, I would have given you all my business!"
You know, sometimes,
men just don't know when to keep their mouths shut.....
women really smarter than men?
Three women and three men are travelling by train home for Christmas.
At the station, the three men each buy a ticket and watch as the three women
buy just one ticket.
"How are the three of you going to travel on only one ticket?" asks
one of the men.
"Watch and learn," answers one of the women.
They all board the train.
The three men take their respective seats, but all three women cram into a bathroom
together and close the door.
Shortly after the train has departed, the conductor comes around collecting
tickets. He knocks on the bathroom door and says, "Ticket, please."
The door opens just a crack, and a single arm emerges with a ticket in hand.
The conductor takes it and moves on.
The men see this happen and agree it was quite a clever idea, so they decide
to do the same thing on the return trip and save some money.
When they get to the station, they buy a single ticket for the return trip,
but to their astonishment, they see that the three women don't buy any ticket
"How are you going to travel without a ticket?" says one perplexed
"Watch and learn," answer the women.
When they board the train, the three men cram themselves into a bathroom and
the three women cram into another bathroom just down the way.
Shortly after the train is on its way, one of the women leaves her bathroom
and walks over to the one in which the men are hiding.
The woman knocks on their door and says, "Ticket, please."
This column is about my personal search for the perfect investment. I don't
give investment advice. For that you have to be registered with regulatory authorities,
which I am not. I am a reporter and an investor. I make my daily column -- Monday
through Friday -- freely available for three reasons: Writing is good for sorting
things out in my brain. Second, the column is research for a book I'm writing
called "In Search of the Perfect Investment." Third, I encourage
my readers to send me their ideas, concerns and experiences. That way we can
all learn together. My email address is .
You can't click on my email address. You have to re-type it . This protects
me from software scanning the Internet for email addresses to spam. I have no
role in choosing the Google ads. Thus I cannot endorse any, though some look
mighty interesting. If you click on a link, Google may send me money. That money
will help pay Claire's law school tuition. Read more about Google AdSense,
here and here.