Comments on: What IS Old School Anyway?

By: BawldGuy

BawldGuy — Thu, 10 Sep 2009 18:03:22 +0000

AI — Thanks! I take pride in my mixed metaphors.

By: Another Investor

Another Investor — Thu, 10 Sep 2009 18:01:23 +0000

Couldn’t have mixed the metaphors any better myself! Pleased to see the other Old School folks agreeing.

By: BawldGuy

BawldGuy — Thu, 10 Sep 2009 17:45:41 +0000

He had endless stories — almost all of which contained killer lessons. He was one smart cookie.

By: Dennis Fassett

Dennis Fassett — Thu, 10 Sep 2009 17:31:39 +0000

I meant to add that I would have loved to hear your mentor’s stories of how he learned what he learned.

I’ll bet they were good ones!

By: BawldGuy

BawldGuy — Thu, 10 Sep 2009 17:27:54 +0000

Hey Dennis — Not having a cash reserve is akin to skydiving without a backup chute. I just don’t get it. Our company policy is to insist on abundant cash reserves, or wait ’till that’s in place.

By: Dennis Fassett

Dennis Fassett — Thu, 10 Sep 2009 17:05:13 +0000

It’s shocking how far away from “old school” we have strayed.

As fundamental as it seems, I can count on a couple of fingers the number of real estate investors that have any sort of cash reserve set aside.

Great post as always Jeff.

By: BawldGuy

BawldGuy — Thu, 10 Sep 2009 16:27:55 +0000

Randy — So happy to hear from a member of the Old School Choir.

Self-funding is a must, with exceptions as rare as hens’ teeth.

Unfortunately those books, CD’s, and seminars did sell a lot of real estate. We’re seeing them in the headlines almost daily.

Buying low and selling high is fine as long as the property paid for itself along the way. Welcome Randy, and don’t be a stranger, OK?

By: RANDY MICHAEL

RANDY MICHAEL — Thu, 10 Sep 2009 13:35:05 +0000

Nicely said. For more than 20 years as an investor I’ve been fighting the conventional wisdom that the value of a single family home is dictated by “comps” and by bank appraisals which use a sales approach to value. For 20 years I’ve said there are two problems with the conventional wisdom: 1) you may not sell the house anyways 2) history (appreciating values) may not repeat itself.

Unfortunately for the other 99% of people, the last few years proved I was right. Me, I’ve only invested in cash-flowing properties, period. Income approach to value. Equity and appreciation are icing on the cake, but the property must be self-funding.

I guess it feels good, almost vindicating, to be proved right after all those years of talking to a deaf audience. Like 9-11, it seems to always take a catastrophe to get people to open their minds and stop mindlessly following conventional wisdom as if they were sheep. The buy low-sell high idea sold a lot of books and seminars and CDs, just not a lot of real estate.