Wisdom can come by reflecting on what happened, what we did, and what other choices might have brought better results. Two of the 20th century’s premier leadership authors, Peter Drucker and Warren Bennis, claimed their remarkable wisdom came from systematic reflections on the past. Strategy consultant Stephen Lynch advocates “rolling reality checks.”
Here are my observations and reflections about the present and future. They’re my thoughts on where we are in the world and income property investments.
The World and the Economy
COVID for Americans has moved from pandemic to an endemic. COVID is unlikely to kill a million annually in the next decade. Many US citizens get flu shots annually, yet thousands die of the flu each year. Former President Trump, President Biden, plus an array of medical experts have encouraged citizens to get COVID vaccinated. Some will. Some won’t.
Our overseas adversaries are becoming more skilled at strategically disrupting our society and crippling our nation. In 1812 the world’s strongest nation tried to destroy our infant nation. They sent almost ten times as many troops as the US could hope to assemble. They made alliances with Native Americans who were trying desperately to preserve their endangered way of life. All the smart money bet against our fledgling country. Today many nations are systematically deploying far stronger weapons to harm the US.
Our financial world is more fragile than most people realize. Computer trading has caused rapid and severe disruptions of stock market values. Many people would be surprised at how close the financial system came to failure. Prudent people have significant liquidity, just in case.
Character will matter more in the future. Who do you trust when you don’t know who to believe? Intense forces in our culture disdain or oppose expertise. They consider knowledge to be exploitation and want to believe that intensity and/or sincerity matter more than what used to be regarded as facts.
Income Property Investments
Apartment listings are more precious. In one year of my 30+ year career, 1000 buildings with more than four apartments sold. In another year, there were less than 100 transactions. In the decade from January 2010 till December 2019, there were 3,381 MLS listings for buildings with five or more apartments. About 55% sold while 45% of the listings expired or were canceled. Maybe there were another 500 sales that didn’t use the MLS system. So, on average about 225 apartment parcels, about 2% of the inventory were sold annually.
As I’m writing this there are less than 40 apartment properties listed for sale, out of 10,500 apartment parcels. That figure, less than .4 of 1%, is astoundingly low. In the last quarter, multiple offers became routine. Sales above list price are not uncommon. Great brokers will find opportunities for buyers. Mediocre agents will drop out.
In the last quarter, I have received more referrals than usually come in a year. My skills have not quadrupled in the last quarter. My marketing budget and solicitation efforts are both down. People I have not previously talked to, introduce themselves and say they know they can trust me.
The government caused our rental housing shortage at the state and local levels. Both California and San Diego have made radical changes in rental housing policy. The City of San Diego has told the state that, for the next decade, 80% of the residential construction will be multifamily! This city intends to suppress single-family homes and double apartment construction. If that intention become reality, don’t expect apartment equity to continue to grow at mafia rates of return in the next generation.
On a Personal Note
Attentive, deep listening will matter more to me than in previous decades. Showing courtesy and respect, especially to people whose paths or views differ, will be an important part of how I assess my growth. I aspire to treat others even better from now on.
I have now completed more than 20 estate sales. Too often the heirs sue each other and blow the family apart. Would that have pleased Grandma? For years my clients have heard me urge them to prepare their heirs to become wise stewards of their inheritance.
This Baby Boomer aspires to influence what people think, say, and do. I aim to model being part of the solution, rather than part of the problem.
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How about you? What do you expect to be different in 2022? I REALLY want to know.
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Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. Read his “Welcome to My Blog.”