Prior Columns: Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Friday, January 28, 2005: What
will you live on when you're 65? It's a silly question because everyone knows
you'll have social security, your 401(k) and all those "growth" stocks
you bought in 2005. But what happens if we have another stockmarket meltdown,
or, god forbid, you pick the wrong stocks or maybe Social Security will be broke
A dear friend recently made it to partner in a major New York City law firm. He
was earning a handsome salary. The day he hit 65, they kicked him out. He's devastated.
His salary has plummeted. He billed his time. That was his only income. Now he's
seriously scrambling for lunch money.
Visit your local
investment adviser and you'll be fed the usual allocation of so many bonds,
so many mutual funds and so many stocks. It's easy for the adviser. He can dial
up on his local computer everything you "need" -- everything he can
sell you that day. It's painless and simple (and profitable for him).
Not so simple
is your best investment -- real estate. Your adviser can't dial up a local six
apartment rental building. He can't dial up a downtown office building syndication.
But we can. We live in a community. We know where the schools are, how good
they. We see what sort of houses our neighbors are building. We can "feel"
our community's pulse. There are great things about real estate:
1. You can't
"print" it. There is only finite land. There is infinite share
scrip. Management prints itself shares and options. They daily dilute our net
worth. No so in real estate.
2. It's local. That means we have an advantage because we're local --
wherever "local" is. Local for me is the the upper west side of Manhattan.
For you, it could be suburban Dayton.
3. There is growth because we have babies and people move here from overseas
4. You can figure its value. You might have a cash flow, like from rents.
You certainly have "comparables" -- next door's house.
5. You can positively affect the value of real estate. Start with painting.
Move to additions. Graduate to teardowns. You can't affect the value of your
shares. The "market" does that. And it's nuts.
6. You can't see, feel or take pride in your share investments. You can
drive by the office building you and your friends own and point to the door
and those three windows. They're yours.
7. You can gain a competitive knowledge advantage over every other bigger,
national player. You're there every day. You're part of it. They're not.
8. And finally, there are few overnight surprises. Yesterday rumors bubbled
up that SBC would buy AT&T (T) and AT&T rose. Because
I am a telecom "whiz" and know how bad AT&T is, I'm short 5,000
shares. And until yesterday I was actually making a few scheckels on that brilliant
deal. I think the chance of a merger slim to none. But, while Wall Street acts
irrationally (i.e. disagrees with me), I'm seriously out of pocket. This overnight
BS doesn't happen with real estate.
9. Financing real estate today is easy and cheap. Banks are throwing
money at real estate. Long-term interest rates are slow. And all your friends
want to own part of your apartment building, your shopping center, your hotel,
your golf course development, etc.
10. There's always strange and wonderful things going on. Like the three
brothers fighting themselves over how to split up the profits on their condo
building development -- before the thing is finished or the first condo sold.
And one of the brothers needs money today for his divorce. (True story). Someone
is going to buy this building cheap. I hope to part of the "someone."
11. Everything in real estate can be outsourced -- from collecting rents
to cleaning toilets.
12. There are more opportunities in real estate than Carter had liver
pills. I tried to chart them this morning. Here's my amateur effort, courtesy
PowerPoint. Notice the breadth of opportunities. The BIG takeaway is
there are gigantic gaps in the market -- where you can make a killing because
no one is looking in your backyard.
could draw several other axes on this chart -- including how many players
are in each market segment, what the local demand is, what the local competition
is, what the local demographics are and what the availability of local/national
Now to your (obvious)
1. I don't have enough time. Sorry, you have no choice. Coops, you do
have a choice. Live on your social security and your miserable 401(k) plan.
2. I don't have enough money. You do. Trust me.
3. I don't know anything about real estate. Good, today is a good time
to start learning. Buy some books. Get a subscription to my new magazine, http://www.PersonalRealEstateInvestorMag.com.
4. It's easier to buy Microsoft shares. I call Smith Barney, place my
order and bingo I own Microsoft. No one said that achieving wealth was easy.
What choice do you have? See point 1. My real estate syndicators are batting
one property bought out of a hundred plus they looked at. That's hard work.
It won't be so hard for you once you have knowledge of your local market.
to the spouse. Talk to the family. Tell them of your newfound goal to be a mini
real estate mogul. Ask for their help. Real estate is a family business. They'll
all have opinions on which palaces the family should own. Get them involved.
That's it for
today. In short, you don't need the stockmarket. And I certainly don't need
A woman was having a passionate affair with an inspector from a pest-control
company. One afternoon they were carrying on in the bedroom together when her
husband arrived home unexpectedly.
"Quick," said the woman to her lover," into the closet!"
and she pushed him in the closet, stark naked.
The husband, however, became suspicious and after a search of the bedroom discovered
the man in the closet.
"Who are you?" he asked him.
"I'm an inspector from Bugs-B-Gone," said the exterminator.
"What are you doing in there?" the husband asked.
"I'm investigating a complaint about an infestation of moths," the
"And where are your clothes?" asked the husband.
The man looked down at himself and said,........ "Those little bastards."
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
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will help pay Claire's law school tuition. Read more about Google AdSense,
here and here.