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Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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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 scene.

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 made rich."
"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 experiencess.

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 here.
+ 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 learned:
+ 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 here.

Are 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.

Arriving home 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.....

Are 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 at all!!
"How are you going to travel without a ticket?" says one perplexed man.
"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."

Harry Newton

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, click here and here.
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