Real Estate Investments – Video

How are Major League baseball parks analogous to real estate investment markets?

 

Transcript:   Hi, this is Jeff Brown, the BawldGuy. The topic today is going to be the comparison of baseball and real estate investment. The reason I say that is this: in baseball, you have different size parks; it’s not the same. You can go to one park, say Wrigley Field for Chicago Cubs, and if you get a wind going out from the plate, you just get a fly ball in the air and you have a home-run. You have the other parks like Petco Park for the San Diego Padres, and you can hit a ball as far as you can hit a one iron and it’s an out or a double instead of a home-run. What parks do and what teams do with their parks is they look at what they have and they mold their personnel to fit that park. So, if you have an airport for a field, home-run hitters aren’t going to work there because they’re going to have less homers — the fences are too far way. What you get is people that hit doubles and triples and singles; you get base stealers. You get great pitching and you get great defense. So your offense doesn’t have to score as many runs because they’re not giving up as many runs. On the other hand, if you’re in Wrigley Field, you sign all the home-run hitters you can because if you score twelve runs it doesn’t matter that you give up ten — you still win. Now, in real estate here’s how it connects. When you’re in one market, you might buy two to four units a lot. If you’re in the market five hundred miles away, two to four units could be the worst investment possible. You’ve got to look at the market the same way you have to look at the ballpark before you build your team. The axiom is this: you take what the market gives you. Trying to force a home-run hitter into a park as big as Yellowstone doesn’t work anymore than putting a bunch of singles-hitters in a small banjo park. You want to match your team to the park. You want to match your approach and what you’re investing in to the market. Let me give you even more examples geographically: in San Diego, which I started as an investment broker over thirty-five years ago, the next home that I move an investor in as an investment will be the first. Why? Because the numbers are stupid bad; it just doesn’t work. How would you like right now, even after the bubble burst, to pay $350,000 for a median home and the most you’re going to get for it is $2,000 a month? Where in other markets you can get a duplex for $100,000 less and the rent is 25% more. You see a trend there. Well, the same thing: you can go to one market and all that makes sense is houses. You can go to another market and the only thing that makes sense is two to four units. You can go to other markets and it doesn’t matter because somehow the gods have decreed that market is good. My point is this again, and I reiterate because it’s very fundamentally important that you understand. Only try to take what the market is going to give you. The market is not going to give you what you want. It’s going to give you what it has to give. As long as you understand that and everything else is kosher in that market and you like it, buy what it gives. Be happy, rinse and repeat. This is Jeff Brown, the BawldGuy. Thanks for coming over. I’ll see you next time.

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About BawldGuy

I'm second generation real estate, first licensed in fall of 1969. Having been mentored by several iconic brokers, I'm also CCIM trained, having completed all 200 hours back in 1980. Have successfully executed well over 200 tax deferred exchanges, many of which have been multi-state in nature. Strong points are analysis and the creation and real world application of Purposeful Plans employing several strategies synergistically. The idea is to arrive at retirement with the most after tax income possible, backed by the largest net worth.

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