I’ve never brought up personal stuff on this site because I haven’t felt like it’s relevant, but recently, a number of people have asked about what I do here in the States.
We’re in the real estate business, residential property management in Savannah, GA, primarily for our own portfolio. Most of our rentals are long-term, although we do have a couple of short-term/vacation rentals. I also do some professional contract work for organizations in town.
I feel very lucky to add the rental business is strong in our niche; we’re even increasing rents a bit. So far, the real estate crisis has not affected our strategy: positive current cash flow. Fortunately, we own mostly smaller units (studio & one bedroom) which are typically in high demand locally. We’re seeing the large rental units, three bedrooms plus, getting hammered; they’re vacant or fetching lower rents. As the growing glut of unsold houses and condos come on-line as rentals, the bleeding will get far worse in this sector.
There is one underlying reason we’re doing OK. I never bought into appreciation get rich quick frenzy. We purchased based current cash flow/return on investment, which guided us to well priced smaller units, with reasonable cash down payments. Don’t get me wrong. Our balance sheet has taken a hit like everyone else but that wasn’t the reason for owning the stuff in the first place.
In the long run, rental property is worth the rents. That’s it.
For what it’s worth, the bottom in the US market in nowhere in sight. There are shoes yet to drop that no one is even talking about. As we’ve been saying for nearly two years, look to international property markets for opportunity, diversification and perhaps even safety at some point. Someday, the US market will be a screaming deal and the prospect of making gobs of money will be off the scale. This day is well into the next decade.
Stay Tuned!
Steve Bowman
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