Self Storage- Economic Outlook- Positioning

[Henry Clark]

My personal assessment of the overall economic risks has hit a tipping point.  

Decided to sell 4 of our Self Storage locations.  They are great cashflow investments.  But my overall investment strategy and Risk/Reward needle is leaning negative for the overall economy.  Want to move to a really great Debt/Equity position.

Paying off debt goes against both REI strategy of leveraging debt and also inflation, paying off with cheaper dollars and having hard assets to ride the increase in value due to inflation.

Our strategy. 

a.  We are retired so no concern on the W-2 side.  

b. We were already in a great Debt/Equity position but will solidify further by selling the 4 locations. 

c.  Stocks, moving out of any overseas investments.  

d. Control more cash in MM or CD's so we don't take the full inflation bite, holding cash.  But liquid to ride any waves or take advantage of any buying or development opportunities.

e. Gold??  Have to research further.

f.  If Farm ground comes up near us that also has development potential will take a look at that.

g.  Teak farms- this already fits our risk strategy since this is a 10-to-25-year play.

h.  Pulling out of building additional buildings we had planned.

i.  Inflation- still have plenty of hard assets and development land sites, to ride any high inflation moves.

Let me know if you recommend any changes/adds to the above action items.  Thanks.

Start small and Make Your Big Mistakes Early.

The above sale move could be a mistake and it will be another lesson I learn.  But my risk/reward needle for me personally is in the red for the overall economy for the next several years.  Either way, we still are in a great position.

[Scott Mac]

Quote from @Henry Clark:

Our strategy. 

d. Control more cash in MM or CD's so we don't take the full ...

e. Gold??  Have to research further.

 d. Thinking more granular about these banking products- Add to the safety you seek.

What I mean is this Money market at Bank of America pays for instance 4%, the money market local Bank of Bricktown Pays 4.5%, an online outfit is offering 5%.

When the SHTF, The local bank, and the online bank may be more likely to fail. In the past I have seen the FDIC telling people they will not be able to touch their money for 20 years in such instances. In fact the money is gone when you need it.

I'm saying be careful where you put it, because if you make the wrong choice you could lose your home due to not being able to pay the taxes, etc...

e. McDonald's will not sell you a cheeseburger for gold. Must have some pocket change for that. 

When the SHTF You might see gold buyers setting up card tables in front of closed businesses or inside grocery stores buying all forms of gold.

They're not paying top price for this because they have more Sellers than buyers.

If you do not take the gold for delivery and have some sort of representative interests in the gold- look up what happened to Iceland during the banking failures. What are known as strips.

Sometimes when successful men fail at their business, the MRS becomes very upset about this and decides this is a good time to fly the coop. Meaning you will pay both sides attorneys fees as well as end up with other possible costs going forward in your life and possible court forced asset liquidations and kicked out of your home. Avoid this situation if you can't at all costs.

No one has a crystal ball.

Good Luck!