This Blogging Community Stuff Is Real

The Blogging Community Really Exists

photo of a blogger for blogging community

Sometimes it feels as though you are all alone trying to get a few audience members to look at your blog.

 

I am moved to write this post as a shout out to Dave who used my comment as an example of good commenting.  

On his blog, Dave put his cards on the table about having a vacant property, including a negative cash flow. 

Dave and I run different blogs, neither focused on real estate investment.  

But when I saw he was going through the same experience I’d had, I was able to offer some advice.  

Hang on, tighten your belt, property appreciates in the long run.  

You didn’t ask, but here’s the backstory.

I had property I was renting during a time of dropping values.  It had an annoying negative cash flow.  I ate the loss every month.  

One evening at a local watering hole, I ran into a couple of real estate professionals.  

Not quite crying in my beer, I was bemoaning the lost cash every month.  

“What would you do with that extra cash?” one asked.  Had to admit, I wasn’t starving.  

He looked me right in the eye and said, “You hang onto that place.  It’s going to go up in value, and you are paying off a piece of it every month.”  

Well, that advice put steel in my bustle.  

I accepted the idea that I was paying a little extra every month for a shot at long-term value.  Real estate is leveraged, which means on a $200 K property, you have a few thousand of your own money invested betting it will increase in value.  You pay off a little chunk every month, get a tax break, expense all expenses, learn a little.  

House prices have risen.  Historically, they dip, correct, balloon, crash, level off, and continue rising.  

Even with negative cash flow, your tenants are paying most of the interest, and maybe a piece of the principle.  

Time passes.  In my case it was more that a decade!  

Had a few hassles with tenants, some repair costs, some vacancies.  But rents and prices did rise again.

I used the increase in equity to get a bigger rental property.  I sold my property plowed my hard-won equity into a bigger rental property using a tax-free 1031 exchange.  

I made back all my monthly negative cash flow, and more, although not in the form of cash.  

It worked out.

So my comment to Dave was pretty simple:  I did it, you can, too.  

The negative cash flow stings but it’s a glass that’s just about full.  It’s the price of a kind of lottery ticket that tends to pay off more often than not.  

Time is on your side.

It can be a psychological boost to be told, “You’re not losing, you’re winning slowly.”

I’ve had many occasions to thank that real estate pro, whose name is long forgotten.  

But he gave me the confidence to see into the future and stop bellyaching over a little negative cash flow.

Hey, if you read this far you might want to read some books on real estate investing.

7 thoughts on “This Blogging Community Stuff Is Real”

  1. Hi Corky,

    I have to admit, your comment on that post sure did make me feel a whole lot better. I didn’t know you wrote your own post about it until I was looking at your blog after your last comment. I’m glad that I came to visit and that I was able to get more insight into your RE adventure.

    I agree, this blog community stuff really does work. I suspect it will keep on working in the future too, regardless of what google does. It is a form of direct communication and experience sharing between people. It is better and more rewarding than SEO work and boring link building activities.

    You can only physically go to one party per day (more or less) but you can visit a lot more blogs and interact with a lot more people online – but in a leisurely and relaxed manner.

    Thanks again for your comments. They are greatly appreciated as are your experiences and insights.
    david recently posted..How I Make Money On The InternetMy Profile

    1. Glad you had a chance to see it, Dave. Pretty convincing evidence that we can build a community and make friends on-line, even if we don’t catch up with one another every day.

  2. Tony, this is a terrific comment. I read a couple of books about real estate years ago, and one thing that surprised me: the equity that builds up can be tapped by additional loans. If you can hang on, get somebody to rent it (without destroying it!), and pay off the principle(or, more commonly, see a rise in prices), that equity can be used to borrow money for a down payment on another property. Being a landlord is not too much work, but it’s stressful. Real estate has two good properties (no pun): 1) it is highly leveraged, meaning your buy-in is a fraction of total value and 2) it is real, not paper, and benefits from inflation. It has the downside of being illiquid and, as mentioned, a constant source of angst. To the would-be real estate investor I would ask two questions, 1) when do you expect to get better mortgage rates, 2) when do you expect to get better prices? I suspect we will look back at 2012 as a time of golden opportunity. Woulda, coulda, shoulda. Thanks so much for commenting, Tony!
    Corky Swanson recently posted..Perfect Father’s Day Gift?My Profile

  3. I wish that I had done something like look at buying a rental property years ago. We sunk around $8,000 into a Time Share, then a few years later another $5,000 into upgrading it. All was based on promises of how it would rise in value as time went on, but in reality you can’t even give them away these days, and the maintenance fees keep on almost doubling every year.

    When my Mom died 15 years ago I debated whether to sell her 2 bedroomed flat (apartment) in England or to rent it out. Back then it was worth £30,000 ($55,000) and I decided it was probably better to sell it. Now it’s worth well over £100,000 ($160,000), the money I got for it has all been spent (a fair chunk on that time share), and I could have had a good steady income from renting it out. Oh well…

    I wish my Mom hadn’t sold the home that I grew up in either. My parents bought the house about 1950, and after they split up and I finished university and moved to London, she wanted something smaller, so in 1978 she sold it for £25,000 ($40,000). The house is clse to Sandbanks on the south coast of England, which is now a millionaires paradise, and the fourth most expensive place to buy property in the world. Last valuation I saw was a good 5 years ago and it was £600,000 (about $1 million).

    Well here I am back in the UK after 15 years of living in the USA, having gone through 2 divorces, and we are renting a property from friends. Can’t afford a mortgage of our own, and all that potential money has gone. A lottery win would sure be nice…
    Tony Payne recently posted..Well How Embarrassing! Your Most Embarrassing Moment.My Profile

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