This one may be worth printing off and tacking up on your wall.
Here in Northern Nevada, and across the Sierras in California, real estate prices are going nuts. To my jaded eyes, of course it’s a bubble. When anything doubles in price for no logical reason, there are weird and highly-suspicious market factors in play.
I mean, jeez — didn’t we just see this with the Dot-Com bubble only a few nervous years back?
This time out, at least, there are some traceable reasons for the explosion. Ridiculously low mortgage rates, for example. Less logcial: The fiddling with adjustable rate mortgages and seconds, essentially gambling a bit to put yourself into a bigger house than you would have thought you could afford.
Everybody likes a bigger house. Status. More room. There are always excuses for having more.
However, much of this sky-rocketing rise in prices just leaves me cold. Why is a house that was “worth” $210,000 a year ago now “worth” $490,000? Did God come down and give everybody on the West Coast a raise in take-home pay or something?
If so, I missed hearing about it.
In 2000, people were seduced by “easy” profits in the stock market, and got burned. Today, people who cannot tell you how much is in their 401-K accounts are buying second and third and fourth properties, using refinancing to get the down payments, and becoming landlords. Of course, finding renters who can cover the mortgage payments will be tough (or impossible), so it’s all negative cash-flow.
No new job, no big sudden raise in pay, no rich uncle dying and leaving a fortune. Nothing has changed for many of these people… except that they see prices going through the roof (literally), hear about friends getting filthy “rich” slinging real estate deals right and left, and don’t wanna miss out on the “easy pickings”.
I, of course, sound like Mr. Piss-On-The-Fun. No one caught in the fever wants to hear anything about caution. Or reality.
Hey, I won’t feel bad if I’m proven wrong, and the market just sustains itself forever. Good for everyone making a killing. Maybe a new race of people from Mars will move into town, eager to pay for houses, and everyone will get what their real estate holdings are “worth” when they’re ready to sell.
Go for it.
Personally, I loathe that kind of risk. It’s not just hard work, doing all the looking and figuring out insurance and inspections and researching city codes and sewer assessments and writing all those humongous checks.
I first got nervous when, after closing the deal on my current abode, the mortgage broker brought out a bottle of champagne to “toast” our little deal.
Were we celebrating my purchase, or her commission?
There’s a ton of money in real estate. I know the quotes: Every billionaire on the Forbes list has most of their holdings in real estate. Everybody needs a place to live. A house is your best investment. Yadda yadda yadda.
I just don’t like going through the gut check.
Instead, long ago I realized I was sitting on something that returned a MUCH better return-on-investment, and the risk was pretty much zilch.
Well, okay, not “sitting” on it.
It’s my brain. It’s what I know, what I’ve experienced and learned, and what I can do. All the useful marketing and advertising stuff I’ve loaded into my noggin.
In my head, I can solve all sorts of problems for businesses, and they will pay me to do so. Stripped down, I could do all this with a broken pencil and scraps of paper. I prefer the computer, cell phone, fax, printer and all that. But I choose to have these gadgets around.
Basically, I can generate beau-coup cash simply by talking. Those of you who bother to read my ever-expanding testimonial files know that a single idea, taken to heart and acted on, has dumped piles of cash into my clients and subscribers laps.
And I get a piece of all of it.
I sometimes lose sight of this.
I am in the investment game.
It’s just that I don’t deal in real estate, or stocks or bonds, or anything else “physical”. I deal in brain power. Giving advice, and writing copy that changes lives and alters the future.
The pen is mightier than the option.
So, you know how I invest in my “pen”?
Here’s one way: I don’t hesitate to attend crucial events like Gary Bencivenga’s big damn “tell all” seminar last week in New York City.
Cost me a small fortune. The attendance fee was five grand, just to put my butt in a seat. The St. Regis hotel, where the seminar was held, is where David Letterman puts up his guests — rooms go up to $750 a night, and toast and eggs will set you back $30.
I had a butler assigned to my floor, for crying out loud.
Nothing but the best, Gary said.
All told, I’ve easily dropped ten large ones for an event that lasted approximately a day and a half.
Get a grip. I earned my money back, with interest, in the first 30 minutes. Because I KNOW I can put what Gary shared to work for me, immediately.
I quadrupled my investment by the end of the first afternoon. And will easily — easily — see a ten-fold return when all is said and done. Minimum.
The connections and networking I did alone is worth all that. Getting my Bag of Tricks stuffed with all those new tools and tactics and insight just makes the future ROI downright obscene.
And you know what’s odd?
This seminar wasn’t a secret. There wasn’t any conspiracy to keep anyone out.
It sold out in days, of course… but I’m astonished Gary didn’t get enough of a waiting list to fill another six seminars. Just astonished.
Because investing in these kinds of information-sharing events is NOT a “cost” to anyone. Hell, it’s only barely an investment… because you’d have to be brain-dead not to be able to make it all back in short order.
I’m not being cranky. I’m telling you one of the big damn secrets of massive wealth in this economy: Get the goods from the experts, and run with it.
It’s that simple.
Ten grand wouldn’t have bought me a closet in a house here in Reno.
Yet, in just a short, wonderful (and fun) weekend, I loaded up with enough useable ammo to open my own vault at Fort Knox.
Stop thinking about the “cost” of getting the info and materials you need. Instead, concentrate on the value.
Don’t go into debt, now — I never tell anyone to mortgage grandma’s farm to get anything. Instead, set up a savings account, and work hard at whatever you’re doing now to shove cash into it. Pay your way as you go — it won’t take long, and it’ll teach you about deferred gratification.
That’s one of the critical missing links in goal attainment, you know.
Anyway, in case anyone was wondering why so many already-established professionals (like me, Halbert, David Deutsch, Jim Punkre, Joe Polish, Carl Galletti, Perry Marshall, all the honchos at Boardroom, Phillips and Agora, and a continuing list of notables that would take me ten minutes to write out) spend good money to attend a seminar like this… now you know.
You invest, you learn, you go out and take what you want.
That’s life at the top.
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A bubble can either ooze out silently or burst open violently like Courtney Love at a rock concert.
There are tools available to you that tell which way the cookie will crumble I talked about them in my Real Estate Pimp newsletter but the real point I get from your rant is how to zero in on what the gut check is telling you.
It’s like your usher in a darkened theater. It could be your only thing available to you to help you find a good seat.
I don’t think the real estate market is one big bubble. It is a few dozen big bubble. People have been Led to believe ..like the stock market Real estate over time will always go up. What the salesmen never say is ” but it does go down. and when it does it plunges” .
about a month ago on cspan i heard Ben Stien .. the economist who does the visine comercial . say something to the effect of ” things are different now ” when real estate was being talked about .
and earlier this week someone in a chat room i visit said ” i want to get into real estate cause that is where the money is … but first i have to get a job ”
i think these are the signs of impending dooom arn’t they …(mild sarcasm)
John, great point – agree that investing in your personal knowledge can change your life. It was kinda hard to believe at first, til I learned from you and a -small- group of others I pay close attention to (Fortin, Kennedy, Rudl, Halbert etc)…and take consistent action with.
Investing in learning from you guys, my marketing/copywriting mentors, has been by far the best $ I’ve ever spent in my life. Wish I’d known this stuff 10 years ago.. the feeling of freedom and “I’ll always be able to make money no matter what” is a blast … and it works.
Too bad I can’t write a great salesletter to the IRS to get out of all my back tax penalties from earning so much recently, though — but that’s another story 😮
But since I just bought a new house, speaking of real estate, at least I have some new deductions to claim. I wouldn’t be buying property in the high-end areas, california/florida/ny/etc.. agree the market’s likely to soften soon. Most of the discretionary income that people took from stocks and rolled into real estate is likely about spent. But I never predict.. just react..
Human capital, learning from the best, like you’re pitching, it’s true — getting under the wing of someone who knows the ropes, that you’ve got rapport, mutual respect with, is priceless stuff.
Knowing what it takes, and testing it, pushing the envelope and punching out new sales every week is solid gold.
John, I’ve been checking out your blog for a while now and its in my top five primarily because you have superior writing.
So many blogs just have crappy writing. I think the best think about your blog is it actually has content of value, but it still manages to maintains a personal one on one kind of dialogue.
Now I’m going to have to order your Kick-Ass Copywriting Secrets of a Marketing Rebel.
If everyone is jumping on a particular bandwagon, the best bet is often to run the other way. Many humans are like lemmings…..all marching merrily over a clifftop.
By the time a market reaches its peak, the guys who are going to make the big money are long gone. They had the vision to buy before anyone else did, they made their profit and moved on. They didn’t let greed for money get in the way of making money!
Hyper-inflation of house (or share) prices comes when every Joe Schmo, thinks he’d like a piece of the pie. Too unimaginative to bake his own pie, he decides to buy a slice of someone elses – and they’ll gladly sell him a SMALL SLICE – for 5 times what they paid for the whole pie. He doesn’t care though, ‘cos the next day someone tells him his slice has doubled in value….until one day……oops…sorry Joe….your pie has gone cold and stale…..no-one will eat that.
Nice Blog, John 🙂
I read this blog post twice because I felt it was so important.Use my ability to write to create value for music and sports business.
And make cash! I’m not a dabbler in investing and know where it should go.