Thursday, June 26, 2014

Investing With Meridian Pacific Properties

Buying a rental property on your own comes with the risk of being on the wrong side of the deal.  What may go wrong when purchasing a rental is what keeps many would-be investors on the fence.  There's the possibility of buying (paying too much) high, relying on poor numbers during the due diligence process.  If buying a property "As-Is," you also run the risk of getting a property that turns out to be a hidden money trap, needing major repairs.  I could go on, but my goal is not to belabor the point that investing in real estate, especially doing it all on your own, is not a risk-free process.  I'm here to showcase a great RE company that minimizes a number of investing pitfalls FOR YOU, all while offering friendly and quality service.  That company is, Meridian Pacific Properties.

MPP is headquartered in beautiful San Marcos, CA, about 35 miles north of San Diego.  But the bulk of their work takes place in the Memphis, TN suburbs.  It is there that they find distressed properties, rehab them (to the delight of neighbors), put them back on the market, and sell them to investors.  They are very selective about the type of properties they purchase and rehab.  In fact, they go after only residential units and the three bedroom, two bath house, is their bread and butter.  They also look for structurally sound construction such as homes with brick walls versus wood.  Why?  To minimize the amount of repairs you, the investor, will need to do as long as you hold the property.  Remember, Memphis, TN area can get very humid, and homes there are subjected to extreme winter and summer weathering.  MPP looks out for you because they are interested in having YOU come back, as in be a return customer, or do what I am doing here, recommend them to others.

You can go to their website: Meridian Pacific Properties
and learn all about why they operate in the area of Memphis, TN.  They have a science to back-up their geographic isolation.  On another note...did you know that FedEx is situated in Memphis, TN?  The giant shipping and packaging company is good for landlords and undoubtedly, they will be employing many workers who need housing to rent from you, if you own a rental in the area.

In 2011, I had the pleasure of meeting Jeff King (Principal), and his associate, Mike Finn (Accounts Manager), at a Mexican restaurant in San Marcos, CA.  My wife and I were less than one year into our marriage and we were looking to invest.  I wanted to invest in real estate, but could not decide if I wanted to go at it alone, or to work with a company who had the insight I lacked, plus the trust I needed to work with someone else.  Jeff and Mike bought my wife and me lunch, and reassured us throughout our conversation.  They didn't sound like scummy salesmen, pushing any one particular house on us.  They presented (with patience and clarity) the benefits of buying cash flow rental units with MPP.  To make a long story short, my wife and I decided to go for it.  Mike Finn emailed me some property brochures, showing pro-forma numbers, property pics, etc., we committed to one property, signing our sales contract all through email!  Their Docusign platform makes the process incredibly convenient.

Right before we closed on this first rental property, I got on a plane and flew to Memphis from San Diego.  Guess who was at the airport to pick me up?  That's right, Jeff King!  Coincidentally, he was dropping off his partner, Kevin Conlon (Principal) at the airport.  I got to meet Kevin with Jeff introducing me as if I was a man of importance, making me feel pretty good up to that point.  After checking out the property I would be buying (what I was there to do), Jeff was kind enough to drop me off at the hotel.  He invited me to dinner with him and his Licensed Broker in the area, Roxanne Simonetti, who I had spoken with numerous times on the phone to get an idea about what property management would be like.  (MPP now has their own Property Management Company to compliment their existing property sales business)  Another coincidence...Roxanne and I graduated high school around the same time in the same school district, East Side Union HS District, in San Jose, CA.  She graduated from James Lick and I graduated from Yerba Buena.  We joked about the miracle that was our exodus from "the hood."

The evening was delightful.  We ate dinner at Corky's Bar-B-Q, enjoying each other's company and the great food.     

Jeff took care of the bill...what a guy!  The following morning, Jeff picked me up from the hotel and drove me around, touring a couple of the areas MPP looks in when prospecting for properties, namely, Bartlett and Cordova.  The property I bought was across the state line in Southaven, MS.  Remember, all of these areas feed into the city of Memphis.  I got to learn first hand what an outstanding entrepreneur and investor Jeff King happens to be.  He's professional and nice, relating extremely well to the little investor like me.

I don't know if Jeff still gives newbie investors the grand tour and royal experience.  I have since bought two other properties from MPP and did so without ever leaving my immediate area.  Yup.  Just asked Mike Finn for some available property brochures, communicated with him via email from start to finish.  I don't need to fly to Memphis, TN to know that the property I'll be buying is there, and that it will soon be sending me $250-$300+ dollars in cash-flow from rents.  Now that's trust!

The lone suggestion I have for MPP is to create their own Financing company/branch.  New banking regulations have made it difficult for everyone to get conventional financing.  This last property I bought from MPP came with many challenges, not having to do anything with MPP or my credit/financing worthiness.  Working with banks and their myriad new regulations plus processes makes one regret seeking their money.  It's great if you manage it without there ever being any obstacles, but lousy when their bureaucracy gets in the way.  I realize becoming a banking entity probably presents many businesses with new problems to manage, but in the long run, seeing a dwindling supply of cash-only investors, it may behoove MPP to take the plunge.  All in all, I wholeheartedly recommend MPP to all of you...two thumbs up for this great company! 

Friday, June 6, 2014

Big Bet on Ford (F) Stock!

I've never truly been a follower of the investment dogma to diversify my stock holdings.  In fact, in my ten years of investing in stocks (I'll be 38 in September), I've never once passed an "Am I diversified" test, the iconic exam Jim Cramer of CNBC puts callers through when they call asking for his help.

I've also never held more than 6-7 stocks at any one point in time during my investment career.  I've bought stocks of companies within the same industry, when I felt the industry would fare well and in particular the two companies within this industry I believed would fare the best.  Why?  Because I couldn't make a decision on the "one" that would fare the best, i.e., I equally valued them.

Doing what is conventional will produce conventional and ordinary outcomes.  Following the herd, will lead you to trimmed down pastures.  True, there is safety (sometimes) in investing conventionally, diversifying, making sure you keep tabs on your weights of different stocks within your portfolio in the event of substantial gains, and re-balancing, etc.  But I can assure you of one thing when you invest in equities this way: You will get rich very slowly.  Most people are okay with this, investing conservatively for 30 years and using compounding to creep toward a big finale over the course of their careers.  I am too.  But I am not opposed to the other side of the coin either, looking to bet big on one stock or a couple of stocks whenever the conditions are right.

In October of 2013, I bought an initial 200 share position of Ford (F) stocks at a cost of $17.80/share.  Looking at my "detail" summary, to date, I am down $164.05 on this trade.  I have bought shares of Ford stock 21 other times.  Wow, that's a lot of trading isn't it?  It's a good thing every single one of these trades has been commission free with my Wells Trade Brokerage account.  (I get 100 free trades a year).  Okay, so trading costs have been kept at zero.  I am now sitting on a position valued today at $24,235.03, 1,426.891 shares.  My Adjusted total cost for these shares is $23,124.790.  I am up to date, $1,110.24, representing a 4.801% return.  Left in my Roth Account where this position is held is cash amounting to $2,406.  I have left this cash untapped for a major crash, so I can purchase even more shares of Ford stock!

Cover photo

Obviously one can see that I am quite committed to the prospects of Ford for this year and 2015.  I am not going to explain why I believe Ford will continue to rise and perform.  That is up to you to look into.

This is a case of putting all of your eggs in one basket.  How many investors out there will share with you this type of personal information?  I am willing to share this with you so you see that given the right conditions, 1) hours upon hours of due diligence on a stock, 2) confidence in the company's growth prospects and economic performance, 3) the right time for a given industry, 4) an investor who has a high risk tolerance and 5) a willingness to buy (strategically when shares fall for whatever reason so long as it is not due to something changing with #2 on this list) and hold long term (1-2 years minimally), you too can bet big.  I say "bet" mostly for jargon's sake.  Yes it is somewhat of a bet.  But it is a calculated bet, one that has calculated risks.

This is the stuff of legends.  I am no legend, but many investing legends have made their fortunes by NOT diversifying.  And you can too!

*This is not a recommendation for you to go out and start doing this today.  And if you do, you do so at your own peril (see #4 above).

Monday, June 2, 2014

Paralysis by Analysis

We often get paralyzed mentally and consequently never get what we want out of life.  This type of anguish is called, Paralysis by Analysis = Too much thinking, and not enough doing.

It’s a sad truth that most of us are walking Zombies.  We believe our only real chance of living a happy life is to win the lottery.

Does this sound familiar?

Monday to Friday: Wake up early, get the kids ready for school (if
you have them), go to work, eat the same thing for lunch that you
had the week before.  You start looking at the clock hoping its near 5:00 pm only to realize
its only 2:30.  DAMN IT!

Finally, you get to drive home from work in rush hour traffic, the highlight of your workday.  You look to the side and notice that gas prices keep going up.  Oh great…you think.  I wonder what it will take to fill up my tank next week.
At home, you check the mail.  Your cell phone bill is double what it should be because they screwed it up again!  You imagine how pleasant the call to the automated billing machine will be.  GREAT!

Next, "honey what’s for dinner?"  (Of course your wife had a full day of her own and resents you expecting her to cook); Spouse, "Oh…I don't know…I don't feel like cooking tonight."  Dinner becomes something you slap together.  That’s what you get!!

Instead of conversing while you eat, you watch some TV or get on your smart phone.  This is where you are probably reading this now.  Or maybe you are reading this at work where you know you should not be reading it, but you don't care because you are under-paid and over-worked.

You spend hours on the computer looking at various investments or doing financial research.  You feel this is the way out of your rut.  But you have no game plan.  You are just swimming around in a big pond of muck most of us call the Internet.  You are over-thinking everything.
You are waiting for the perfect opportunity.  In your mind the perfect opportunity is an obvious tangible thing that when it presents itself the heavens will open up and your bank account will fill up.
Guess what?  The perfect opportunity does not exist.  I have made multiple investment decisions in my life and I can assure you, not one of them was perfect, i.e., out of this world returns with zero risk. At some point, if you’ve found a reasonable investment by virtue of due diligence, you will need to act.  Failing to take a risk is far more risky to your livelihood. The alternative is working your 9-5 job, saving at a snail’s pace, relying on a pension you haphazardly build, or winning the lottery, to rescue you from the rat-race.

Thanks for reading.