What’s the business and investment atmosphere in your region? Have you done a geographic analysis?
Transcript: Hi this is Jeff Brown the “Bawld Guy” here to talk to you today about the difference in analysis when you’re looking to invest in a different area, especially one that’s out of your comfort zone geographically. Everybody wants to be able to drive by their properties because they think it’s the best way to go, that will be another video, but here’s what I want to tell you when you finally decide that’s okay for you. Stop thinking you have to begin with the micro analysis of neighborhoods, specific properties, etc. You want to start with an area’s regional macro analysis. Let me give you an example; I’ve been all over the western United States and a little bit of the Midwest looking all over at markets I wanted to be a part of, I’ve been a part of a few of them, I’ve turned down six or eight for every one I’ve liked. I landed the last five years in eight or nine markets in central Texas. Here’s why, let’s take my home state of California. The macro analysis shows this; they tax everything that moves, they regulate everything that they can’t tax. If you’re a landlord, you’re the bad guy going in. You’re guilty until proven innocent. The bottom line is that some time in California’s future there’s probably going to be rent control. They’ve tried it in San Diego, one of the conservative bastions of the state. There’s nothing that recommends California as a solid and comfortable investment environment for real estate people, there’s just nothing. Knowing all this in advance, why would anybody who believes that macro analysis of California even go on to a micro analysis, at all, of properties and neighborhoods. It makes no sense. You have a target on your back and it’s not a good one. Let’s look at some of these other states. They have much lower taxes. They love investment capital. For instance, you can’t go to Texas in a good sized Starbucks and swing a dead cat without hitting a couple of venture capitalists in the head. They’re coming not only from around the country, they’re coming from around the world because they’re welcome in Texas. Same thing with real estate. People right now are selling real estate for a little bit more in Texas then they were five years ago in this market. Why is that? It’s because it’s a free market. When you go to court as a landlord in Texas you better have your story straight because the courts in Texas respect the sanctity of the contract. If you did everything you said you were going to do and you can prove it, and your renter didn’t, you will win. What do you know…apparently the written word means something in Texas. That concept, that very understanding of what we believe in our heart of hearts has to be your bottom line reason for investing in any region, whether it’s your hometown or not. Look, nine years ago this quarter I left my hometown of San Diego because I couldn’t look people in the face anymore and sell them investment properties. It turned my life upside down for almost two years and it’s because I finally sat down and did the macro analysis and said what am I doing? And I’ve been happy ever since. You need to do the same. Stop thinking that you can only invest in your hometown. This is 2012, not 1962. You can do it. Just understand feel welcome as an investor because of the results of your macro analysis before you start looking at anything else. This is Jeff Brown, the BawldGuy. Thanks for watching today, I’ll see you next time.