Gas, Gold, and the Dollar today

April 9, 2008 in Gold and Silver, Money Thoughts, Real Estate | No comments

Gas hits an all-time high here in California at $3.75 a gallon for regular unleaded, Gold predicted to hit $1100 by the end of the year, and our dollar is sinking once again.

I spoke to a women looking for some advice on her finances. She owns a nice place in France that she wants to fix and rent out. There is no mortgage on it, but the bathroom is unusable and she has no funds to fix it. I asked if she was willing to sell it now while the real estate market has not totally crashed yet, and she said she wants to keep it because it is so beautiful even though it’s unusable. I offered her a solution that would take some time, but help to secure her future.

  1. sell the France condo (she might get $200,000 for it), then do either #2 or #3 below
  2. take that money and find an apartment building to buy, use the $200k as a down-payment or closing cost OR
  3. take the money and buy a few condos at $25,000 to $30,000 a piece and pay it all in cash so there would be no mortgages. (believe it or not, there are a lot of these places in the midwest)
  4. She could also rent her house here and use the income to sustain herself in France as she fixes up the place. If the rent gives her enough income, she could sustain herself for a long time. (the weak dollar is a concern on running the actual number that she would have to consider)

Investing in real estate has its risks, I am well aware of that. I’ve made my mistakes and had my homeruns. The key is knowing who to get help from. Success is usually done when good team is put together. Spend the time to find good professional help, and your risk goes dramatically down, and success rate up. I think referrals work best in finding good team members, but so does asking a lot of questions to see how they answer. A combination of getting a referral and interviewing them is even better.

Don’t forget to educate yourself as much as possible. The more you know personally, the better you’ll be able to see “red flags” in a deal. The future is yours to make and mold, you can’t do it by praying God drops everything in your lap.