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less the investor borrows all his equity out to buy two more deals.
The bargain buyer is in the exact same situation as the top of the market buyer, except he owns 3 houses, not one. I had four friends who, in the late 1970’s, did this exact thing. They each owned 10-30 properties. One of them owned only beachfront Malibu properties. The result was the same for all of them. By the bottom of the market in 1983, all of them had lost everything. Two of the four also got divorced in those 3 years because of the financial stress from a falling market.
Lessons to learn: First, do not think you are smarter than the people who passed this way before you; you’re not. Second, markets never go up forever, have not performed as if they will. Third, if you are not prepared for the worst, it will kill you. If you are prepared, it will only hurt a little. You will survive and come away much richer in the end.
About the author:
Willard Michlin is an Investor, Business Broker, California Real Estate Broker, Accountant, Financial Distress Consultant, Well known Public speaker and Administrative/Business Consultant. He can be contacted at his Ventura, California office by calling 805-529-9854 or by e-mail at broker@kismetbusinessbrokers.com See other article by Willard at |
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