I see your point, which is another way to do things. The numbers though, like my way better. Here’s why.

Your point about volatility is correct. That’s why I WILL NOT work with anyone unless they have a Sominex account (cash reserves) that makes ME comfortable.

Once that’s in place Michael, the potential visit by Murphy to which you allude will bear no fruit for him.

Meanwhile, because the investor was safely able to acquire not only growth property(s), but with better leverage, they’ll significantly exceed the growth in net worth than the guy who decided to use your method.

It won’t even be close — and with the cash reserves on which I’ve insisted, he’ll sleep at night when that tenant skips, or the A/C goes bye-bye in August.

As usual i like your writing and partially agree with your concepts. For example, I really think this is more about what you do with your cash flow. I totally agree that you should do your best to trade up for future growth, but couldnt you also use cashflowing properties as a base to buy more proprties? This strategy would lower your portfolio volatility and provide you some cushion in really bad times. Additionally, this would speak to the smaller investors that cant buy growth just yet. Finally, buying growth is a bit more challenging than buying cashflow. Cashflow is obvious, lets say .10 cap type properties. Growth on the other hand is not. If you buy at the peak of the market in growth, you will experience neither cashflow nor growth. Great advice, but I thought the readers might want a slighty different perspective as well.

Exactly. Phoenix has unbelievable pluses going for it. The fundamentals are sound and highly unlikely to change. Its residential real estate market just got way out ahead of those fundamentals and are exacerbated by a concentration of very scary financial practices. The good news is both those things are self curing and somewhat contained within their industries. The only general impact will be because housing and finance are part of the general economy. Unlike SoCal falling off a cliff and staying there, Phoenix will be more of a v-bottom. All the good initial recovery will be in place before most people even see it.

Eric

Why don’t we do the ‘guy’ thing, and start over?

Nobody’s told the thousands of people migrating their, or he companies racing each other to hire more employees, (making Maricopa County the #1 job county in the country a few weeks ago) that Phoenix is a bad place to be.

I predict, as apparently you do too, Phoenix will ultimately live up to its name.

The fundamentals and pent up demand are simply to powerful a tandem to be held back — once the smoke clears on the correction that is.

Just came by for a weekend read. Was worth it. So many have focused on the immediate and tangible that they lose sight of the goal. Thanks for the insight. Off to listen to some podcasts…