All Forum Posts by: Henry Clark

OP. In the process of converting a working line of credit balance to a fixed loan against an existing property.  Talked with our banker. 

Some points from our discussion.  Note we are in the Midwest, Iowa.

1.  Residential loans are going down

2.  Commercial loans have not started to decrease.  He views the next Fed meeting as creating two data points people can gain direction from.   Unfortunately with the mass change in employment data and transition in that top management not sure there will be consistent data for the Fed to work from.

3.  He is seeing more commercial deals moving forward.  

4.  His banks delinquency accounts are close to zero.

 5.  Our area is heavy agriculture related.   Harvest is just underway so no indications yet on stress, mainly due to tariffs and no sales to China.  

6.  Loan access is not an issue for us since we don’t shop our business.   
      
Not pushing our loan timing.   Will let it run past the next fed meeting to see if there is more positive interest rates. 

Got news on the second lot their water well came in over 2x gallons per minute.  8 is ok.  Plus the driller hit good clean sand at 111 feet all the way down to 150feet.  That means there is a large pool of clean fresh water on site.   In a country setting Water access is THE most important aspects.  

We are waiting on the fiber optics install.  The contractors Plow broke down.   The electric is all drilled.  They just need to pull the wire and set boxes.  
Developing a project boils down to what you control and don’t control.  

Have to love Self Storage rewards.  Shoutout to Kanabo Fabo restaurant in Imotski.   Went to see the Blue Lake.   Next time the Red Lake.  

Talked with a realtor in Sibenic.  Found out they only sell properties their company out of Austria own.  They said most firms only sell their book of offerings and don’t work with other firms.  Plus most realtors are young in the last 5 years.  And inexperienced.  They said prices have nearly doubled in the last 3 to 10 years due to COVID, joining the EU and being Found.  

Enjoyed Sibenic.  Not very touristy.  Still small town Croatia.  

OP

Talk with the retirement home administrator.  Are you planning to pay $6k to $10k per month out of pocket or have the government pay?  Either way your mother’s house funds will get used up.  Government will go back 5 years and require all of her funds and assets that were distributed to be returned.  At the moment there is only one favorable outcome.   Talk with the administrator and see if you can buy the house at a discounted amount.   If that will pass the smell test.

As you mention use leverage.

The next comments and your actions depend on your view of the future.

1.  Buy now.   If you think interest rates are going down.   You can refi later.   If rates go down, sales prices will go up.

2.  Hold your cash.   Holding cash is bad since the dollar is crashing.  But if the stock market crashes more houses especially Bnb will come on the market at lower prices.

3.  Your personal housing.  Do you have a gain.  Sale and use the 2 out of 5 capital gain exclusion.   Buy a multi and you move into it.  Might be hard since another investor.  
Check your mother’s situation.  I don’t think her house funds will be available to you either way.  

OP

1. Can a person “Walk and chew bubble gum?”.  Have “C” average or better in high school?  Then have them call me.  Remember the word FREE.  I can get them Free housing.  Free money along with the Free housing $20,000 and up per year, not taxable. Free college and or trade schooling.  Free retirement. Free lifetime healthcare.  Drum roll- 0% down on a house.  If they follow a plan they will be worth $1.5 to $2mm by their mid 40s.  If they keep following the plan then $4mm by their mid 50s.  

2.  “C” average or above high school student.  Good paying job in demand today.  No college debt.  2 years after high school buy a house.  

3.  Lot $30,000.  All utilities in place, say hookup $10,000.  Build any type of house.  Build a basic small stick home for $100,000.  1mm metro area 20 minutes away.  4 lane interstate 2 miles away.  Fiber optics in place.     No building inspection except electric.
4.  $15,000 lot with utilities street side.  Buy a trailer new for $120k or buy a used trailer and have set for $60k.      

OP. Have been thinking about this same topic.   To expand the discussion and possibly a slightly varying view and approach.  That we are actually taking, not just talking about.  

1.  To me the best asset to be in is to have Debt.  The longer the term the better.  BUT make sure you have liquidity to cover payments thru either cashflow or other assets.  To me an investor wins on the asset side by its value going up, and they also win on the DEBT side as the dollar gets cheaper and cheaper.

2.  We invest in Silver.   It is great but we didn’t  go hard enough into.   Stopped buying at $30.  Now about to get back in at $5X.  Long discussion.  But gold and silver to me are dangerous assets.   They follow the Risk in stock markets up.  we are over 100x P/E ratio on the Mag 7.  When the stock markets fails, both gold and silver follow assets down within a few months.  I actually like this.  A crystal ball for when to get out of metals.  As soon as the stock market collapses.  
   
3.    Cash is King-  yes, playing with a falling knife.  Did a sizable reduction of our stock positions into cash equivalents.  This is a short term position of a year or less.  A.  Step over into silver., b.  Buy cargo containers for our storage locations.  At a 8 year low in price.  100% deductible year one. Buy at $3,000 wholesale, can resale at $4,500 retail.  c.  Have another storage site I want to buy which is for sale, just asking more than I want to pay.  

Lot depends on your investment life cycle.  Most of the things above don’t apply to someone just starting out.  

BP you did it again.  Time for dinner.  Over in Europe, Croatia.  I can’t pass up beef liver and grilled onions.   One of my all time favorites, especially with a beer.  All the things on the menu and I pick something I can cook at home, but great.

It’s your money, your right, even if you’re wrong.    

On the above I will be wrong, either in magnitude or timing.  Hope I’m not too far off.

The above post has to be AI.   Who would ever put calf liver and onions in a post?

Found out if you put a deposit down on construction the contractor can back out if they pay your deposit and a matching amount back to you.  So a contract might be a contract. 

Killing time after lunch on the boardwalk in Split, Croatia.   Separate post on this trip.  My overall view hasn’t changed.  

1.  Hindsight wish we had moved more into Silver.  Bought in at $30 or below.  Now pushing past $50 in the last few months.  This is actually one of our safest investments.  We have a crystal ball.  You always wonder when a market top occurs.   But you don’t know!   Actually with precious metals they go up trailing the stock market and they go down trailing the stock market.  As soon as the stock market crashes you need to sell.  Actually need to decide if we move more of our cash position into Silver.

2.  Best investment-  haven’t really thought of it this way.  But our debt is our best asset.  Inflation and the dollar going down are reducing the cost of our repaying the debt while at the same time our Self Storage asset values are going up.

3.  Crypto-  have not really researched. Watched Mark Moses YouTube.  Definitely agree it is a limited fund supply.   Thus it will both hold its value versus the U.S. currency which has to get deflated by either inflation or currency printing.  Watched Peter Schiff YouTube and he notes the same issue as I mentioned in Silver or say gold.   When the stock market goes down it will also follow.  Again haven’t researched both views much.  But it’s a new asset that I don’t want to follow since it has had a short life cycle thus far.

4.  All of our asset classes are moving as planned upward.   Our cash position as planned is moving downward.   A trade off for liquidity, plus hopefully buying into other asset classes.

5.  In Croatia in a trip.  Bread has gone from a $1 to $3 per the cab driver.  Says Ukraine use to supply most of their wheat. A.  Glad we aren’t on the lower economic end or inflation would hurt versus help.  B. Governments will always use war as a last resort under financial pressure.  Most people use tea leaves to read the future, but I’ll use a loaf of bread.  

Self storage specifically.  Decide on your risk tolerance.  Depending on that refinance to both get a lower rate possibly, increase your rate but reset and extend your balloon period to say 7 years, amortize your loan back out to 20 or 25 years.  Might cost you more but you’re locking in your loan finance risk.

LTV% make sure your in a position to cashflow. If not keep some excess cash positions to meet payments until your occupancy rate is in a sufficient position to meet cash flow if your a newer location.

Don’t know “when” but it’s getting closer. 
Like all pontifications about the future, I’m either wrong in impact or timing.  

It’s your money, your always right, even if your wrong.  

OP show the numbers.

  What is your BAH?  
What is your all in cost on this property?  P/I, property tax, ins, elec?

can you STR the extra room,

How much longer are you stationed there?

After 2 years you should be able to sell at a loss, and still make money with your BAH.