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Buy Stupid, Sell Smart (The Forrest Gump Way to Buy Real Estate)

By
Mortgage and Lending with Platinum Home Mortgage Company NMLS #238304

                                                                             "BUY LOW" is the classic advice for buying real estate.  But how low is low enough?  I say, a BETTER STRATEGY is to just BUY STUPID. Funny thing, you can get rich much faster being stupid.  Just ask Forrest Gump.

When you buy stupid, you don't need to wonder when the market will bottom out. Nope, all you need to do is announce your intention to buy real estate at any gathering. If every one else in the room thinks you're stupid, your timing is perfect. Go ahead and let them tell you all the reasons NOT to buy real estate, and why you are stupid.

BLAH BLAH BLAH....the economy. BLAH BLAH BLAH.....interest rates. BLAH BLAH BLAH....(fill in the blank with latest natural/political disaster). Smile, and resolve to start dialing your real estate team. The time is right.

The Loma Prieta earthquake devastated Santa Cruz, California on October 17th, 1989. The downtown was pretty much destroyed and the city (one of the most beautiful coastal towns in all of California) was "blamed" for the death and destruction that rocked much of Northern California, including the famous freeway collapse in the Bay Area.

To add injury to insult, soon afterwards a highly unusual freeze killed nearly all tropical vegetation in Santa Cruz, causing mass defoliation to much of the landscaping. The place could not have been any uglier, or anymore down and out, when I looked at my brother and said, "Let's buy a beach house in Santa Cruz".

I was only half kidding, and everyone else howled with laughter thinking our idea was pretty stupid. But we were soon the owners of a house with a view of white caps, and a one block walk to a gorgeous stretch of sand.

The price was unbelievably low that foggy, rainy day we made an even lower than asking price offer. There was NO damage to the house from the earthquake, but the rest of the world continued to think Santa Cruz might crack and fall into the Pacific Ocean, never to be seen again.

In spite of what everyone else thought, the only aftershock we ever experienced was how the house SOARED IN VALUE.

I later bought real estate when everyone else was investing in technology stocks. I helped our daughter purchase real estate during the economic melt down after 911. Both of these houses were bought far below market on gloomy rainy December days, and soon blossomed into houses worth far more.

Hey, California is STILL California. 

Most people would think buying real estate in California right now is sort of, well, stupid.  BLAH BLAH BLAH...still going down in value. BLAH BLAH BLAH.....mortgage crisis. BLAH, BLAH, BLAH....what are you, stupid?

Yeah, all the way to the bank.

P.S. Heads up. Gloomy December days coming.

 

 

 

 

 

 

 

Bill Nazur
First Lending Solutions - Riverside, CA

Janet

Call me stupid....as a matter of fact, call me an idiot as I've invested in these markets for the last 20 years, and I laugh when I'm only competing with my friends and myself.

Shhhhh.....its our secret. Its between you and I, and Forrest Gump.

Oct 16, 2007 10:43 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender
Hi Bill: Oh someone else besides me is stupid? Glad to be in such delightful company. Thanks for commenting on my incredibly stupid blog!
Oct 16, 2007 10:51 AM
Anonymous
Doug
I was living in Santa Cruz during the Loma Prieta earthquake, and I can attest to the fact that downtown looked like a warzone. So many of the majestic brick buildings crumbled to pieces, a couple of people died, and it wasn't rebuilt until years later. So kudos to you for buying into that precarious situation.
Oct 16, 2007 02:01 PM
#3
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

I'm always amazed at how many people are afraid to live in Florida because of the hurricanes. But in Daytona Beach, where I was born and raised, and now sell real estate, 2004 was the first time in over 40 years that we were hit by a major hurricane. It's simply not something we worry about. Unfortunately, our market didn't even register a blip on the radar, even after 2004. I wish I could have made a stupid real estate investment at that time 

smiley

Oct 16, 2007 02:56 PM
Brian Block
RE/MAX Allegiance, Managing Broker/Branch Vice President - McLean, VA
Northern Virginia & D.C. Real Estate
Janet, this is an excellent contrarian post!  Buy things when other people are not and then there will be profit in your future.
Oct 16, 2007 11:48 PM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Doug: You inspired this post. I keep thinking of your challenges in buying in Lamorinda and hoping you will come across an opportunity.

 I could write another post about the "stupidness" of selling the house in Santa Cruz (my brother's idea, not mine) as soon as he thought the houses in Santa Cruz could not possibly increase in value any more. He bought apartments in Texas, I bought a house on a lake in California. Who do you think ended up better off?

But I still miss Santa Cruz, and would pounce on some real estate there again if the opportunity came around. Yes, even an ugly rancher!!!!!!!

Oct 17, 2007 02:10 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Lisa: I grew up in New Orleans and went through plenty of hurricanes. Right before Katrina, everyone thought I was nuts when I tried to explain it was the WATER DAMAGE that was going to devestate the city, not the wind. I knew from coming home from being evacuated, and having the house flooded everytime. There are natural disasters everywhere, and it would not stop ME from owning beach property in Florida...you have some of the most beautiful beaches in the world there!

Brian: This seemed appropriate with so many buyers on the fence waiting. They may regret this opportunity.

Oct 17, 2007 02:14 AM
Catherine Myers
Windermere Bay Area Properties - Walnut Creek, CA
Walnut Creek, CA Real Estate

I told a client the other day... REALTORS are BUYING NOW!  Hello!!?!?!  The public always thinks we're in control of the market, we should've told them that it was on its way down, we should've protected them from themselves when they bought at 20% over the already inflated list price 2 years ago as they now want to resell for profit... but NOW they WON'T listen when we say now is the time.  Stocks say buy low.. but they don't say buy at the lowest.. you don't always know when that is.. and since many stats are presented in hindsight, will they even see that elusive bottom they're waiting for until its too late, and on its way back up?

I've been SHOCKED at some of the prices on these REO's.  But you know what.. I think its going to be the banks taking these houses back... and lets roll thru this inventory.. then we can maybe resume some "normalcy" in this market.  These short sales lingering on the market.. .. seem to only be postponing the inevitable. I've heard of very few short sales being approved.. and more often than not, even with a SS in progress, buyers are going elsewhere as prices continue to decline and waiting out a lender no longer sounds attractive. 

One listing I have started at 489k.  We just dropped it to 417k as there are two bank owned properties on the same street.  At 417k we are now under the price of those two bank owned props, and of course they are NOT in good shape.  Buyers, THIS is a good deal... stop waiting for what you perceive to be the deal of the century because you're showing you don't know it when you see it anyway!

Oct 20, 2007 03:27 PM
Gena Riede
Riede Real Estate, Lic. 01310792 - Sacramento, CA
Real Estate Broker - Sacramento CA Real Estate (916) 417-2699
Janet, isn't it nice to be stupid? Stupid is as stupid does! All I can say is that I wish I had been there beside you and also bought a beach front property! I wonder how many home buyers will be saying that when the market changes?
Oct 21, 2007 04:19 AM
KC Coonc
Windermere Real Estate/Whatcom, Inc. - Bellingham, WA
Bellingham Commercial Real Estate
If we are not at the bottom of the market now, I think you can see it from here. We will emerge into another rising market if not in the next few months certainly it should come by mid next year. The numbers seem to be better than the media negative hype.
Oct 21, 2007 06:05 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Catherine: Hi, always nice to hear from my WC AR friend. Did Brad Andersohn call you? He is trying to get together all of us Rainers in Walnut Creek for a networking group. All I could think of when he asked me was, great, I will finally meet Catherine, the superwoman who has kids, blogs, sells real estate, and seems so tech savvy. Hope to see you soon!

Gena: Yes, but you know cycles work the other way. As soon as the market turned around said brother forced me to sell. I wailed that he would regret it, bought another house, and still pine for the ocean. Believe it or not, I am looking to jump in again, and have Deborah Ryman sending me listings (another AR  member). I still choke a little at the prices!

KC: I think I agree with you!

Oct 22, 2007 02:46 AM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY
I just used another character that Tom Hanks played as a metaphor for the wisdom of buying real estate as a long term investment.  Did you ever see the "Money Pit" where Hanks plays the hapless Walter Fielding who buys a real fixer-upper and rapidly ends up in over his head.  The antics are hilarious (Hanks can be so funny) but the bottom line is that if Walter managed to hang on to his property - he would be filthy rich today!  Investors stopped buying in 2005, now those in the know buy - and look stupid - while the many "smart" people sit on the sidelines.  Why? No one rings a bell when the market bottoms!
Oct 26, 2007 01:03 PM