The most frequent question that I get from readers since I converted over to the “doom and gloom” camp is this: “Why don’t you sell one of your Bay Area rental properties if you think the markets will crash?”
There’s no doubt that I think we are due for an upcoming market crash/correction…
But the order of magnitude?
I have no earthly idea…
The reason I’ve gone “so far off the deep end” is because I think it’s important for leveraged investors to be proactive as opposed to being reactive. In other words, “hope for the best but prepare for the worst.” That explains why I’ve been so fixated on gold and cash lately.
For new readers of this blog, you may think that I’m this crazy, pessimistic lunatic, but I assure you that hasn’t always been the case! 😉
As long-time readers of this blog know, I was a quintessential permabull from about 2009-2014.
When it comes to selling off a golden goose?
I’ve thought about it, but i’m not THAT “doom and gloom”. No, there are no bunkers, canned goods, or ammo for me… well, not yet anyway!
Truth it, I think the world will continue on, and my outlook for the future is pretty bright. Yeah, there will probably be some bumps in the road (which I’m trying to minimize as much as possible), but for certain I don’t see a Mad Max scenario unfolding.
Why I’m NOT selling any of my 5 Bay Area properties:
- Properties are all cash flow POSITIVE with decent margin.
- Wonderful long-term tenants in place (some instances, 3+ years).
- My rentals are all priced below market. The two refi properties are each $400 to $500 below market rate (I have some buffer in the event of a downturn that forces all landlords to reduce rents).
- Class A properties located next to: high-tech employment centers, freeways, good school districts, etc.
- 30 year fixed low interest rate loans for each property.
- Too many: fees, taxes, commissions, etc. when it comes to real estate transactions… It ain’t exactly as easy as selling stocks.
- If I quit my job, I may not be able to secure loans and buy back in later.
- If things do somehow end up Mad Max, I have over $400,000 in liquid assets, uncorrelated to real estate to hopefully bail me out. If that fails, then I’m moving to Chicago to live in one of my basement units to escape the impending zombie apocalypse…
That’s about it… You will ALWAYS have your critics and haters no matter what, but really, I’m not sure what more I can do to get my ducks all lined up in a row as much as possible… I’ve done just about the best that I can do, so if SHTF still, oh well, life happens, I guess…
What was meant to be, will be… I ain’t tripping out about it!
And, here’s one more exceptionally good reason why I am not selling:
Super Bowl 50 is gonna put Santa Clara on the map! 🙂
Well, maybe not…
But I hope you all enjoy the BIG GAME today!
You might even be able to catch a glimpse of my properties on camera!