Please come back.

You have an interesting site and some very interesting ideas.

In reading through your posts, I noticed that you had chosen Boise, ID as the place to invest, that’s why an article this weekend caught my eye:

http://www.theolympian.com/130/story/104475.html

“Experts say investors trying to unload houses in highly populated southwestern Idaho have likely boosted the number of homes on the market.

They say a recent drop in median home prices might have triggered the sales rush.

Nearly 8,000 homes are for sale in the area.

Financial experts say that many homes on the market will likely continue driving down home prices.”

In light of this development, have you changed your mind about Boise?

Archives? I’ve been blogging less than a year.

Case studies? I’m working on one now. But let’s take a case that actually began in ’04.

Two fourplexes bought in the general Phoenix area in the spring of ’04. Both using traditional neg-am loans, with 10% down payments. They were purchased for $200K apiece, with both buyer & seller being represented by separate brokers. It was an arm’s length transaction.

They still own both of the properties. They are currently worth about $350,000 apiece – a gain of $300,000 in three years.

It took about $48,000 to clsoe to close the original purchases in ’04. By selling them now they’d net about $244,000 – which includes accounting for higher balances than the original 1st loan amounts.

Gee – (use of that word telegraphs me coming up with a very cool number) I wonder what their capital growth rate was for the three years?

Try 71% a year. For real. And they used only 10% down payments, ALONG with neg-am loans. And, did I forget to mention the 2nd TD’s at 10% interest?

Will you get 71% capital growth every year. Not in any world I’m aware of. Will it happen every now and then? Yep. What usually happens Jonathon, is our clients will benefit from a modest to moderate property appreciation rate, which will translate into a capital growth rate of 18-35% a year, give or take.

If you had been the client Jonathon, we’d have put twice as much down, and your capital growth rate would still have been magnificent.

That’s a real life ongoing example which began, as you hoped, in ’04.

Does this answer your question?

A final thought. As I mentally review the various purchases and exchanges I executed for clients in ’04, the results have been, without exception, uniformly stellar.

Thanks again for teeing it up for me Jonathon. Your questions are excellent.

Do you have any archives from 2003 and 2004 that I can go back and read?

Sorry, I don’t mean to take up so much of yor time!

Comfort levels vary from client to client, and whatever the level, we have a policy to adhere to it. There’s nothing holy about 10% down payments.

Your personal comfort level will be the deciding factor in how we approach creating your particular plan.

Thanks for allowing me to clarify that.

The Purposeful Plan is too risky for my own personal level of comfort.

Thank you for the prompt reply.

The simple answer is what separates the pros from the amateurs. A pro knows, through astute and in depth analysis, which areas are very likely to grow, and which ones are not, or are temporarily flat or declining.

An example would be Phoenix. In 2003 San Diego had begun to reach price levels for income property that were bordering on silly. It was just a matter of time before prices there would hit ‘critical mass’.

I spent a few months looking at 10-12 cities west of the Mississippi as candidates for my clients’ attention. It turned out Phoenix was my pick. Those who traded and/or bought then and for awhile after did exceptionally well – with low downs of 10-20%. Once the market there showed signs of tiring, we shifted our attention to other cities, deciding on Boise.

The clients in Phoenix are fine. They’ve made money, and will move their gains to another growth regions in the next year or two. Some have refinanced and moved that equity into Boise.

I was recently referred to a nice lady who had done her own research, and bought two Phoenix condos – in ’06 – using 100% financing. Not a good move. I had to tell her she was dead in the water until that market recovered and began to move up again – which it will. The question is, will she survive her amateur mistake?

So the long answer to your question is know what you’re doing. Really know – or know someone who does.

It definitely is a real danger – especially if you’re guessing about some or all of the factors involved.

In the end Johnathon, there are no guarantees. It’s called risk capital for a reason. That said, there is a reason the same investors seem to always be in the right place at the right time.

They’re not betting the horses based on what colors the jockey’s wearing. They’re doing things on purpose.

I hoped this helps.

Great question – thanks.

Isn’t that a real danger right now?