Which forces have peaked or are reversing themselves?

Turbulent changes in the current of our life – its pace, pattern and scale – challenge our notions of what is real.

 

Since beginningless time people have wanted to know where life will take them. 

 

Today you and I are in one of those periods that occur every 200 or 300 years when people don’t understand the world anymore, when the past is not sufficient to explain the future. 

Turbulent changes in the current of our life – its pace, pattern and scale – challenge our notions of what is real. 

How do you stimulate your own powers of foresight?

Consider the following thought provokers. 

Ask yourself, in following categories 

  1. What are the brand new trends and forces? 
  2. Which are the ones growing in importance? 
  3. Which current forces are loosing their steam? 
  4. Which have peaked or are reversing themselves? 
  5. Which are the “wildcards” about to disrupt us in the future? 

TECHNICAL thought for food: 

Electronics, 

Materials, 

Energy, Fossil, Nuclear, Alternative, Other, 

Manufacturing (techniques), 

Agriculture, 

Machinery and Equipment, 

Distribution, 

Transportation (Urban, Mass, Personal, Surface, Sea, Subsurface, Space), 

Communication (Printed, Spoken, Interactive, Media), 

Computers (Information, Knowledge, Storage & Retrieval, Design, Network Resources), 

POLITICAL thought for food:

Post-Cold War, Third World, 

Conflict (Local, Regional, Global), 

Arms Limitation, Undeclared Wars, Terrorism, Nuclear Proliferation, Weapons of Mass Destruction, 

Governments (More/Less Power and Larger or Smaller Scale), 

Taxes, 

Isms: Nationalism, Regionalism, Protectionism, Populism, 

Cartels, Multinational Corporations, Balance of Trade, Third Party Payments, 

Regulations (OSHA, etc.) Environmental Impact, 

U.S. Prestige Abroad. 

SOCIAL Thought for food: 

Labor Movements, 

Employment Patterns, Work Hours / Schedules, Fringe Benefits, 

Management Approaches, Accounting Policies, Productivity, Energy Costs, 

Generations: Elderly, Boomers, X, Y, Z 

Urban vs. Rural Lifestyles, 

Affluent vs. Poor, 

Neighborhoods and Communities,

ECONOMIC Thought for food: 

Unemployment / Employment Cycles, 

Recession, Balance of Payments, 

Inflation, 

Taxes, 

Rates of Real Growth, 

Distribution of Wealth, 

Capital Availability and Costs, 

Reliability of Forecasts, 

Raw Materials, Availability and Costs, 

Global versus National Economy, 

Market versus Planned Economies, 

Planned or Organic Growth.

Steps:

6)   Anticipate changing circumstances and economic cycles.

7)   Persist and pivot to navigate external threats and opportunities.

17) Sketch out your trajectory in 5-year timeframes.  Will we fall into another recession?  Absolutely.  Will you be ready this time with future-proofed strategies?

19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

When’s the Next Recession? Will You Be Ready This Time?

Will we fall into another recession?  Absolutely.  Will you be ready this time with future-proofed strategies?

 

Get an early handle on the potential for a major recession, consider the potential impacts on you, your career, your organization and respond sufficiently ahead of any expected economic downturn.

 

Source: Shaping Tomorrow’s AI Robot, Athena. 

Forecast: The Fed will tighten too much and tip that curve into recession territory sometime next year.

Trend: Economic, Political

Sector: Financial

Insight and Source: Economist who helped discover predictive powers of bond market says there’s no sign of recession right now   Ron Insana | @rinsana

 

Forecast: Developed countries are badly equipped for another recession, both economically and politically, and central banks should be wary of raising interest rates just to control inflation.

Trend: Economic, Political

Sector: Financial

Insight and Source: Summers Warns the Biggest Economies Are Not Prepared for Another Recession Christopher Condon , Joao Lima , and Paul Jackson

Forecast: Many economists now expect a mild recession in the U.S. by 2020 at the latest.

Trend: Economic, Political

Sector: Financial

Insight and Source: IDC Forecasts Worldwide IT and Telecom Spending to Slow After Last Year’s Rebound; Economic Risks Have Increased

Related Forecasts:

  • “The U.S. central bank forecast one or two more hikes for 2018.
  • Assuming no additional stimulus in 2020, the fading of the U.S. fiscal sugar-rush after 2018-2019 could lead to withdrawal symptoms that could exacerbate a cyclical slowdown.
  • The U.S. could target an additional $200 billion in Chinese goods, followed by another $300 billion – bringing duties on a total of $550 billion Chinese products, which is more than the $506 billion the U.S. imported from China in 2017
  • In the US, headline inflation is projected by the IMF to increase to 2.5% from 2.1%.
  • The IEA predicts the U.S. will add 1.7 million barrels per day in 2018, followed by another 1.2 mb/d in 2019.
  • Being well overdue for a recession in the US, the unbridled optimism of global investors will eventually end, once they consider the plethora of rising risks.
  • Achieving policy objectives will become more challenging from 2020 amid a technical recession in the US and a faster deceleration in Chinese economic growth rates.
  • In the next three years, a rising amount of bonds maturing within one year entails rollover risk if financial conditions tighten abruptly.
  • A recession in the US will cause economic growth in Canada to slow to a little above 1% in 2020.
  • The risk of a recession really picks up after a year, or sometime in 2020 because that is when you start to see the fiscal stimulus start to fade.
  • One change from recent years is that corporate car rental prices in North America are expected to rise by as much as 5 percent in 2018 due to operator issues.
  • The US stock market is on the brink of an imminent crash that could trigger another global recession.
  • Borrowing costs climb to a four-year high just as investors begin to anticipate a downturn in the global economy.
  • US rate hikes risk triggering a recession in 2019 or 2020 by putting the brakes on growth.
  • With unemployment at 4.1%, inflation fears are rising: Typically, the Federal Reserve starts to increase interest rates to slow the economy and push inflation back into its lair – but in doing so, the Fed raises the risk of recession and pushing down already lofty stock markets.”

Steps:

6)   Anticipate changing circumstances and economic cycles.

7)   Persist and pivot to navigate external threats and opportunities.

17) Sketch out your trajectory in 5-year timeframes.  Will we fall into another recession?  Absolutely.  Will you be ready this time with future-proofed strategies?

Appreciation

Why swim upstream, if the current is moving everything in the opposite direction, right?”

Using economic cycles and bubbles, demographic shifts and a way of sizing up quality-of-life communities to live and invest in.

 

An excerpt from Book Two in “The Knowledge Path Series” dedicated to helping you make more money from a lifestyle businesses you’re truly passionate about.

Peak around the corner.

About the time of my own mid-life crisis I discovered the author Harry Dent.

Bubbles Bursting

He introduced me to economic cycles and bubbles, demographic shifts and a way of sizing up quality-of-life communities to live and invest in.

Any Poehler’s Leslie Character

Amy Poehler’s fictitious Pawnee, Indiana didn’t grow on me until season five when neighboring Eagleton, an ultra-affluent town, was written into the script.

In the sixth season the town of Eagleton, involved in a longstanding rivalry with Pawnee, goes into bankruptcy and is absorbed by Pawnee.

Fictitious Pawnee, Indiana

An effort spearheaded by Leslie after she sees no other way to save the town.

Having lived in a small Indiana college town on a bluff overlooking the Ohio River for four years and, then in another rural college town for my masters degree, I sought higher quality-of-life choices in a region that wasn’t so topographically flat.

But where?

  • And what if I discover after I move that I don’t like it?
  • What do I need to know ahead of time?
  • What if I chose a new Eagleton somewhere else and it files bankruptcy?
  • That can’t be good – except for Amy Poehler, right?
  • Nearly anybody can forecast the future.

How do you know which ones will come true?

I set up “The Journal of 2020 Foresight” after researching the top 100 trends and predictions from a variety of technical, economic, social and political sources.

And, knowledge labs to monitor key indicators in 5-year timelines –

  • 2003 to 2008,
  • 2009 to 2014 and
  • 2015 to 2020.

Why swim upstream, if the current is moving everything in the opposite direction, right?

The first knowledge lab, conducted during the 5-year timeline between 2003 to 2008.

Top Forces, Trends and Predictions

We began tracking some of Dent’s forecasts, especially the following four out of our original 100:

“4 – Basic innovation in communication technologies is allowing more people to relocate their homes to small towns and exurbs, and telecommute to business. 

3 – The baby boomers are moving into their vacation-home-buying years, which, in combination with the first trend, will stimulate demand for property in attractive resort towns. 

2 – The echo baby-boom generation is now moving into its household formation years, which will stimulate demand for apartments and rental property in the cities, and has already caused commercial property in these areas to appreciate, 

1 – There is a broad geographic migration towards areas of the country with warmer climates. You can expect the first three trends to be accentuated in the southwestern United States. “

Back to Harry Dent’s economic cycles and bubble forecasts.

He included a bubble wildcard as a fifth forecast.

The mother-of-all depressions, arriving sometime in the 2009 to 2015 time horizon.

Which presented itself as the mother-of-all Great Recessions.

More on that later.

The Warm Migration Trends
  • But, let’s say you decided to investigate opportunities triggered by the warm climate migration?
  • How do you explore the possibilities?
  • How do you go about it?

Dent borrowed from innovation, growth, and maturity product lifecycle curves to describe the potential for community growth and real estate appreciation.

S-Curve of Growth

You might say he spoke my language coming from my career in high technology.

  • Innovation – .1%, 1% to 9%.   
  • Growth – 10% breakout to 25% and from 50% to 75% and 
  • Maturity then to 90% – 99% percentiles.

What if the lifecycle model could be applied to resorts – estimating investment appreciation and community growth?

How does that work?

“The time it takes for an idea to move from a .1% idea to a 1% prototype, and finally to a 10% niche in the marketplace (Innovation), is roughly the same amount of time it takes for that niche to accelerate up the curvilinear curve of market acceptance through 50% to 90% (Growth).”

In the innovation stage, the risk is high and the potential reward could be astronomical.

If you found a small pristine mountain community at this stage and moved or invested in a vacation home on a lake, you may see your small down payment and mortgage pay off handsomely decades later.

Or not.

  • No guarantees.
  • Buy low, sell high.
  • As an investor, you’d want to find that goldilocks moment.

You wouldn’t want to invest too soon and wait forever, but definitely not too late when it is way too expensive to buy.

Pick sometime in the early growth stage but before the late growth phase turned into maturity.

When everyone else has heard of the premier destination.

As the mix of community residents begins to shift from High Country Eagles to Wireless Resorters.

You might find Pawnee attractive, but you probably missed the golden opportunity to move to Eagleton.

And by “season six” you’d be glad you did.

In priority order for finding the first three driving trends in one place – broad communications, Baby Boomer vacation-home buyers and echo-boom (Gen-Y, Millennials) entering the rental market, he lists:

  • Resort Towns
  • Small College and University Towns
  • Classic Towns
  • Revitalized Factory Towns
  • Exurbs
  • Suburban Villages
  • Emerging New Cities
  • Large-Growth Cities
  • Urban Villages

What if you’ve already built your mobile knowledge company, “Mobile KnowCo” and weren’t bound by your current fixed location?

How would you know if you found a town to fit your needs?

On your next vacation Harry Dent said to keep your eyes open for:

  • “A new look that includes intelligent town planning for increased human interaction; and abundant open space; 
  • flexibility in home design; 
  • planning for safety; shared facilities; and high-tech communications infrastructure.”

With those criteria in mind, we initiated coverage of “Resort Towns” in western United States like…

And, continued to aggregate lists of “Best Places” that fit Dent’s other eight categories of towns and cities.

Southwest Region from Wikitravel

From those thousands, we focused on and curated only those from six western and island regions:

  • Hawaii and other Tropical Regions;
  • Texas Regions;
  • Southwest Region (Arizona, Nevada, Utah and New Mexico);
  • Pacific Northwest Region (Washington and Oregon);
  • California Regions; and of course my favorite
  • Rocky Mountain Region (Colorado, Montana, Idaho and Wyoming).

But guess what?

All vacation destinations aren’t equally attractive and the reasons why aren’t obvious until you dig in and find out for yourself.

So, the only real question becomes, which one is right for you?

Especially if you longed for a fresh start.

Or were forced to take one.

(22) Selectively evaluate the best quality-of-life communities to live in and weigh the tradeoffs of risk and rewards for accruing real estate appreciation along a progression of rural and small towns that meet what your pocket books can afford.

Millennials and Boomers Shape the Economy

If you review the 2009 to 2014 timeframe, the financial experts suggest a simple investment strategy. Find the stocks that performed horribly, lagging far behind the market leaders.

Stock Market Performance
“You want to buy stocks of the companies where that extra income is going to be spent. That could make technology, for one, a big beneficiary, as well as healthcare and entertainment.”

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part Three in a 3-Part Series.

Part One: Tomorrow

Part Two: What Lies Ahead?

Please remember.  Check in with your financial planner as the following trends and opinions change and may have before you read this.

Rules of Thumb

Is there a rule of thumb you can count on going forward?

You know like “buy low, sell high.”

As they say in my family, it’s all relative.

 

If stocks earn 4% a year, but cash in the bank earns just 1%, stocks still win by a long shot.

  • So Baby Boomers will have to stay in the stock market for a portion of their portfolio.
  • For Millennials who invest on a regular basis in an IRA or 401(k) plan, and who won’t need to tap into their funds for two decades or longer, just buy and hold.
  • Unlike the Baby Boomers who fear a significant loss over the next five years, don’t fret about bad financial news.

In fact, root for falling stocks, because you’ll be getting more shares for your money.

If you review the 2009 to 2014 timeframe, the financial experts suggest a simple investment strategy.

Find the stocks that performed horribly, lagging far behind the market leaders.

Tracking Winners and Losers

While the market leaders run out of steam, the laggards will probably …

beat U.S. returns over the next five years by buying low to  eventually sell high. But psychologically, it’s hard to buy losers.

 

Losers like:

  • Foreign stocks and bonds.
  • Emerging-market stock funds .

They’ve lost 5.8% a year.

“We’re expecting to raise our positions there in the back half of 2016.”

Understand the risks, though.

In a world where a stronger dollar and weaker currencies depress the returns for American investors in foreign markets it may be time to nibble here and there.

Bears vs. the Bulls

“It will never be obvious when the markets, or their currencies, have hit bottom. next five years.” 

  • In a reversal, financial advisors and economists expect China’s share of global growth to fall to 21%.
  • But, they expect emerging economies’ share to climb to 34%.
  • And, previously out of favor European and Japanese stocks will continue to benefit from their central bank policies aimed at keeping interest rates at rock bottom to support growth.

But there’s no getting around the fact that …

“the world will face a financial crisis rooted in mammoth debt levels.”

  • In 2016 a pivot in pay increases will be welcome news in the U.S. households.
  • But, maybe not for stockholders as promotions and bonuses usually come at the expense of corporate profit margins.

And, the grass is greener.

Getting Ready for Musical Chairs

The percentage of talented employees voluntarily quitting their jobs for better opportunities is the highest since early in the Great Recession.

Typically though …

“It takes a long time for people to realize they’re in a better bargaining position.”

That can change quickly thanks to the Internet and social media.

Once trading places begins, Millennials and savvy Gen Xs can take advantage of a powerful means to discover which companies are good ones to work for and which to avoid.

Consumer Behavior Influencing Stock Performance

It won’t take long for workers who feel under appreciated to make the jump.

And, that’s great, right?

“In a perfect world, rising wages would spark a ‘virtuous circle’ where workers would boost spending, driving up demand for goods and services. That would lift business sales and earnings, in turn allowing companies to continue raising wages.”

 

A virtuous circle takes time to develop in a less than perfect world like the one you and I live in.

But, here’s another simple rule of thumb.

Changing Tech Leaders
  • Where the real economy may influence the stock market.
  • Where consumer spending by Millennials and Baby Boomers may figure into gains in your portfolio.

As one expert put it.

“You want to buy stocks of the companies where that extra income is going to be spent. That could make technology, for one, a big beneficiary, as well as healthcare and entertainment.”

 

Steps:

(6) Anticipate changing circumstances and economic cycles.

(7) Persist and pivot to navigate external threats and opportunities.

(17) Sketch out your trajectory in 5-year time frames.  Will we fall into another recession?  Absolutely.  Will you be ready this time with future-proofed strategies?

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

What Lies Ahead?

So, the forecast remains turbulent with plenty of volatility

Market Cycles
Harry Dent years before even predicted the “Mother of all Depressions” lasting well into the decade beginning in 2010 and lasting until 2020.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part Two in a 3-Part Series.

Part One: Tomorrow

Please remember.  Check in with your financial planner as the following trends and opinions change and may have before you read this.

What about the 25 year old Millennials?

Many, if not most of the college educated are burdened by student loans and high rents that eat up a huge share of income.

Good news for landlords, probably not so much for the starter home demand, yet.

But, for those who successfully found good employment with a fresh start on a career path, even if their pay rises they’re reluctant to  spend — or take a chance on a new job — so, don’t count on a broad positive impact on the economy just yet.

Their risk aversion may be one of the biggest overhangs from the Great Recession.

Look, they witnessed the financial woes their parents or friends endured after the 2008 crash.

While the demographic trends probably aren’t as negative for growth, you should account for them and prepare to adjust in any long-term scenarios you construct.

Obviously they’re the early adopters for companies including Airbnb and Uber..

And as another expert cautioned …

It’s impossible to know in advance how many business ideas will spring up to disrupt or even replace existing industries.

The period after the 2008 financial crash turned out to be pretty decent for the U.S. economy.

Many economists and financial news channel pundits peddled dire forecasts in 2009 and 2010.

Harry Dent years before even predicted the “Mother of all Depressions” lasting well into the decade beginning in 2010 and lasting until 2020.

Instead, by the end of 2015 …

  • The official unemployment rate is back to 5%. 
  • Corporate earnings reached record highs. 
  • And a venture capital boom has funded thousands of promising start-up companies.

But, what lies ahead?

Have we celebrated too soon?

  • The contrarian message appears more reasonable.
  • The economy and markets face challenges that could make the next five years very different.

Like what?

  • Don’t expect more than “low single digit returns on stocks and bonds.”
  • The annualized investment returns will be lousy as the January 2016 steep plunge foreshadowed.
  • Were talking 4% to 4.5% roughly half of what wealth managers plan for their clients.

And, that’s through the end of the decade

So, the forecast remains turbulent with plenty of volatility.

News at 11.

Will we ever return to tried and true savings vehicles for the Baby Boomers hitting retirements like their parents swore by?

One economist says don’t hold your breath,

“As for bonds, with yields so low it’s mathematically impossible for fixed-income securities to earn high returns.” 

How is that possible?

Five years ago a 10-year U.S. Treasury note was paying 3.5% in annual interest. 

Now, new notes pay 2.11%. The drop in yields means older, higher-yielding bonds have risen in value, boosting their “total return” — interest plus principal change.

Yeah, so?

But with the Federal Reserve’s decision in December to begin raising short-term interest rates from near zero, it becomes more difficult to imagine longer-term rates declining significantly, barring a new recession or global shock. 

Here’s what hurts my brain when wrapping my head around bonds.

  • If longer-term rates stay where they are, all you earn is the interest. 
  • And if market rates rise, older bonds will fall in value, offsetting some or all of your interest earnings.

Steps:

(6) Anticipate changing circumstances and economic cycles.

(7) Persist and pivot to navigate external threats and opportunities.

(17) Sketch out your trajectory in 5-year time frames.  Will we fall into another recession?  Absolutely.  Will you be ready this time with future-proofed strategies?

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

Tomorrow

“It’s impossible to know in advance how many business ideas will spring up to disrupt or even replace existing industries.”

Nest Egg
Seared into their brains is a haunting future in which they outlive their next egg, not having saved enough money for retirement.

 

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part One in a 3-Part Series.

Please remember.  Check in with your financial planner as the following trends and opinions change and may have before you read this.

Aging Baby Boomers

Sometime in 2015 Millennials overtook Baby Boomers as the nation’s largest living generation.

Most everyone older and younger than the Baby Boomer generation grew tired of living in its shadow.

Thanks, Baby Boomers

And hearing about its impact on the economy, real estate, and well, you name it.

The oldest Millennial was born in 1981 and the youngest  in 1997

So doing the math for you, it works out like this.

Millennials (ages 18 to 34 in 2015)  numbered 75.3 million while the Boomers (ages 51 to 69 in 2015) dropped slightly from the decades long, popular estimate of 75 million to 74.9 million.

One estimate projected  75.4 million Boomers lived in 2014.

The bottom line?

Ain’t No Spring Chickens

They aren’t babies any longer.

Fewer and fewer of them will be around each advancing year.

In between, as you recall, lies the Gen X population (ages 35 to 50 in 2015.)

Sandwiched Gen-X

They get no respect.

  • And they’re already sick and tired reading or hearing about the older and younger generations.
  • But, they’ll have to get used to it since the Millennial population is projected to peak in 2036 at 81.1 million when the Millennials reach 56 years of age
  • By 2050 there will still be a projected 79.2 million Millennials.

Generation X became the “middle child” of generations.

Their ages spread out over 16 years compared to the 17 years of the Millennials

Knight Rider Kids

Though the oldest Gen Xer is now 50, they shouldn’t give up.

They can still become number two, if they try harder, or at least eat healthier and workout more often.

Actually, they can just wait until 2028 to outnumber the Boomers.

There will be 64.6 million Gen Xers and 63.7 million Boomers.

Gen X population will peak at 65.8 million in 2018.

Now back, to Baby Boomers.

They were all that.

The largest generation since the 1950s and 1960s having peaked at 78.8 million in 1999.

The Lone Ranger on Black and White TV

By mid-century, the Boomer population will dwindle to 16.6 million.

Talk about a boom, then a bust!

Let’s examine how the two huge generations will impact the rest of us.

Aging Boomers and coming-of-age Millennials will accelerate changes in the economy.

No question.

Housing Regrets

But, not everything is rosy or the same for both generations.

  • Both Baby Boomers and Millennials  will increasingly feel squeezed financially.
  • Roughly 150 million Americans feel squeezed, so they’re not alone.
  • But, chances are they both account for most of the 150 million citizens.

Just compare the median ages of both generations as of 2015.

Baby Boomers, age 60.

Millennials, age 25.

The 25-year-old Millennials, having lived through the Great Recession, find themselves either unable or unwilling to spend.

While the 60-year-old Boomers (parents or grandparents of Millennials) have been playing savings catch-up.

Seared into their brains is a haunting future in which they outlive their next egg, not having saved enough money for retirement.

Nest Egg

Which may last as long as 35 more years.

Or, as one financial expert tells them,

“You’re just going to have to live with lower rates of return.”

Steps:

(6) Anticipate changing circumstances and economic cycles.

(7) Persist and pivot to navigate external threats and opportunities.

(17) Sketch out your trajectory in 5-year time frames.  Will we fall into another recession?  Absolutely.  Will you be ready this time with future-proofed strategies?

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

Real Estate Investment Types

Once you’ve got residential properties under your belt, the next easiest is investing in and managing industrial and commercial properties.

Renting Your Residential Properties
If the path of development stalls or turns in another direction, your bet on higher appreciation bailing out your investment turns out to be a sucker bet.

 

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part Two in a 5-Part Series: Is An Investment in Real Estate Right for You?

Part One: FOMO

Real estate experts recommended multifamily properties as a good first step while skipping raw land that only produces expenses not income until you sell.

By comparison multifamily rental units provided steady income.

Multi-Family Rentals
  • Normally rent checks came monthly by mail while the value of the unit appreciates.
  • Of course, now in a frictionless economy, they can be directly deposit funds into your account without delay.
  • Another example of, with the right insight, a fully functioning Knowledge ATM.
  • On the downside you’ll need to deal with problem tenants from time to time.
  • Depending on the age and condition of the property you’ll begin to incur high repair costs that will eat into your profits at some point.

Once you’ve got residential properties under your belt, the next easiest is investing in and managing industrial and commercial properties.

Renting Commercial Properties
  • The experts caution about jumping into large properties, advising beginners to start small.
  • Incomes tend to rise and fall with the ups and downs of the economic cycles.
  • When conditions favor your property and your vacancies are low you can generate large incomes with a full building.

What about shopping centers and strip malls?

Strip Malls and Shopping Centers
  • Like commercial properties in good times which generate high incomes with centers and malls you can share in the gross receipts of your tenants.
  • And, with the right location your land can appreciate quickly.
  • But, there’s a downside.
  • Buying can be complex and difficult to negotiate due to the property’s high cost.
  • So, zero cash deals can be extraordinarily hard to work out.
  • And, remember sophisticated tenants want to negotiate their best deals which will eat into your profits.

What’s the attraction to raw land?

Low Barrier for Entry with Raw Land
  • In great areas it can appreciate very quickly as development approaches your location.
  • And, before the path of development becomes common knowledge you may be able to tie up property for as little as $ 1.00 down.
  • However, without the strong appreciation probability, raw land requires improvements like streets, sewers, electricity and other utilities — all costs.
  • So it rarely gives you a positive cash flow, especially after the tax burden is factored in.
  • If the path of development stalls or turns in another direction, your bet on higher appreciation bailing out your investment turns out to be a sucker bet.
Initial High Cost of Entry in Self Storage

Likewise, building self-storage warehouses incurs out of pocket expenses.

But once they are built, or if you buy existing units, you can enjoy positive cash flow with little overhead and low operating expenses if you keep your vacancy rate low.

Steps:

(22) Selectively evaluate the best quality-of-life communities to live in and weigh the tradeoffs of risk and rewards for accruing real estate appreciation along a progression of rural and small towns that meet what your pocket books can afford.

(34) On your visits look for any newer developments that may trigger changes in neighborhood patterns. New construction in or around the neighborhood? Major regional economic adjustments? Transition from households with children to ones that are empty nests? Rezoning, and dramatically rising/falling land values?

FOMO

Just before the Great Recession managed to dash homeowner dreams and investor real estate businesses, most of the different methods promoted common profit goals.

Which Type of Real Estate Investment is Right For You?
And, as a business model you could evaluate different types of real estate investments

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part One in a 5-Part Series: Is An Investment in Real Estate Right for You?

Part Two: Real Estate Investment Types

Part Three: Building Your Rental Real Estate Business

Housing markets.

Real Estate opportunities.

What Do You Really Need to Know?

Are we experiencing the fear of missing out (FOMO) again?

Are we experiencing the past all over again?

But with a new generation?

Remember the absolute real estate feeding frenzy before the melt down?

  • Rich Dads,
  • Trump University,
  • Wealth Management Expos.
Real Money Was In The Training Programs

We sat in the audiences and listened to their high pressure pitches to buy their training programs in downtown LA.

We encountered no shortage of

  • books,
  • tapes,
  • seminars pitching ways of making money with
  • OPM – Other People’s Money.

Timing?

The worst case materialized when thousands jumped in and over-extended themselves just as the bubble burst.

They got caught holding the bag.

Risk of Foreclosure

In a game of real estate musical chairs, the economy pulled the chair out from under them.

  • What were they thinking?
  • Obviously, not expecting a reverse cycle?
  • But, looking back now and projecting ahead, do the methods work?
  • Can you still find opportunities with the degree of risk you can afford?
  • What should you know?

So far we focused on moving to resort communities that bring out the best in you.

  • Should you just buy a second-home, but keep your primary residence and rent out your vacation home?
  • If you do move, are there any other ways to make money in real estate that make sense for you?

Just before the Great Recession managed to dash homeowner dreams and investor real estate businesses, most of the different methods promoted common profit goals.

Each recommended real estate deals that only …

  • generated a positive monthly income,
  • appreciation growth, with
  • zero or near zero down payments
  • securing a mortgage, and
  • cash in your hand on each deal.

Your job, then is to research and then visit communities that fit your criteria with fewer tradeoffs.

And, as a business model you could evaluate different types of real estate investments —

  • multifamily residential properties,
  • industrial and commercial units,
  • shopping centers and strip malls,
  • raw land or self-storage warehouses.

Steps:

(22) Selectively evaluate the best quality-of-life communities to live in and weigh the tradeoffs of risk and rewards for accruing real estate appreciation along a progression of rural and small towns that meet what your pocket books can afford.

(34) On your visits look for any newer developments that may trigger changes in neighborhood patterns. New construction in or around the neighborhood? Major regional economic adjustments? Transition from households with children to ones that are empty nests? Rezoning, and dramatically rising/falling land values?

 

Wireless Resorter or High Country Eagle?

The impact on rural and remote quality-of-life counties will be unevenly felt across the landscape posing different demands for local goods and services.

Enjoying Pristine Moments
The Southwest, Rocky Mountains, and Northwest (in that order) will have the highest population growth and the greatest potential real estate appreciation in the nation.

Final installment in a 4-Part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Part Three :  Who’s Free to Move About the Country?

Part Two: Demographic Lifestyles and Buying Power

Part One: Determinism

Here’s the case for leaving California, which many people already know.

California’s high cost of living and strict environmental standards discourage many businesses from locating there.

As a result, all of the states around California are experiencing explosive population growth.

Here’s the case for staying put in California for the Golden State’s residents.

Love Affair with California

Great weather, abundant recreational opportunities, and an innovative social and technological environment all contribute to this fact.

But, where will you find growth and equity appreciation?

The Southwest, Rocky Mountains, and Northwest (in that order) will have the highest population growth and the greatest potential real estate appreciation in the nation.

Southwest Region from Wikitravel

Like most North Americans, according to Dent, I prefer to live as near as I can to the coast.

Because of the vast natural beauty

Businesses have also benefited from access to shipping ports, he says.

This, in turn, means that coastal areas were the first to become congested and expensive.  

Santa Barbara, Los Angeles and San Diego are close to merging into one metropolis, as have Monterey, Santa Cruz, San Francisco and Santa Rosa in northern California. 

Metropolitan Encroachment

Fortunately, the Central Coastal area between Santa Barbara County and Carmel in Monterey County doesn’t lend itself to mega development.

Big Sur in California’s Central Coast

In fact, those  coastal areas that still had underdeveloped land suitable for building have grown the fastest. 

These areas include Vancouver, Seattle and Portland in the Northwest. 

Pacific Northwest from Wikitravel

But areas in the Northwest – Vancouver and Seattle- are quickly approaching population saturation.

They are becoming increasingly expensive, which leaves only Portland to develop strongly in the coming decade.

As a result of the congestion and expense along the coastal areas, it is inevitable that people and businesses will begin looking at inland areas to find attractive towns and cities.

So it’s not just out-of-state migration from California contributing to Dent’s trend.

Rocky Mountain Region from Wikitravel

That’s why we’re seeing such remarkable growth in the southerly portions of the Rocky Mountain area and in desert states including Arizona, NewMexico, Utah and Nevada. 

As the Great Recession’s lingering effects dramatically decrease non employment-driven decisions to relocate can significantly play a greater role.

What’s the impact driven by a segment of our population not driven by employment-related criteria?

Employment drivers for 60-64 year olds is 25% as strong as that for 30-34 year olds.

Concentrations of 55-75 year olds in rural and small-town population of 55-75 year olds will increase two-thirds from 8.6 Million to 14.2 million between 2000 and 2020.

Back Road Magic

The impact on rural and remote quality-of-life counties will be unevenly felt across the landscape posing different demands for local goods and services.

Empty nesters will no longer need the living space they once enjoyed.

Especially after the last of the live-at-home 20-29 year old Millennials strike out on their own.

Some empty lifers with champagne tastes on “Budweiser” budgets are attracted to High Country Eagle communities filled mostly with

  • Rustic Eagles,
  • Rural Cowboys,
  • Small Town Borders, and
  • Satellite City-zens.

And, to those Wireless Resorters with resort amenities for their second homes:

  • Distant Exurbans,
  • Resort Suburbans,
  • Maturing Resorts, and
  • Premier Resorts.
Festive Resort Living

If you couple changing housing needs with the early retirement options available to the more affluent empty nesters, then you have newer early retirement options.

What both categories of empty nesters, the 45+ and 55+ age groups, have in common is that stage of life where they are no longer raising their children in their homes.

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Who’s Free to Move About the Country?

California doesn’t have a corner on the market for individuals and businesses seeking pristine natural quality-of-life communities with an open and innovative social environment.

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals. 

Part Three in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Part Two: Demographic Lifestyles and Buying Power

Part One: Determinism

What about those aging Baby Boomers?

If they follow the broad trend lines, they will retire in place.

Importance of Grandchildren

The community they now call home after their last corporate transfer.

Where their children and grandchildren call home.

Dent recommends checking out the best suburban and exurban communities on the edge of attractive cities in addition to the more compelling resorts and university towns.

If we look at the trends in which cities and geographical areas have attracted the most retirees in the last decade we can get a better clue as to where the growth will continue to accelerate as the pre-retirement and retirement age groups grow in the coming decade. 

Mammoth Mountain Getaways

For this next part, remember what Mammoth realtor Paul Oster wrote – Dent’s track record makes him a better demographer than an economist.

Remember that on a 63-year lag for average retirement, baby boomers will be retiring in rising rates from 2000 – 2026.  

After this boom ends, deflation is almost certain to ensue for at least a decade and possibly into the early 2020’s. 

Resort Retirement Benefits

Dent said that means the cost of living, the price of real estate, and the interest rates should drop substantially.

This deflationary downturn will offer direct benefits to real estate owners and buyers. 

Has the time come and gone – when Dent’s trends wither on the vine?

We only have to review Lake Tahoe and Mammoth Lake’s real estate markets to call into question the accuracy of Dent’s first trend.

Lake Tahoe Traditions

The first trend is a broad migration pattern towards exurbs and small towns, many of which will continue to hold most of their value through the downturn.

This third wave of migration – an exodus from the suburbs – will accelerate through the first half of the 21st century, continue long after this Deflationary Shakeout ends.

The second trend will be a strong and consistent rise in retirement home purchases.

Mountain Retirement and Second Homes

Baby boomers will drive the market for this kind of property from 2002 into around 2030. 

A third long-term real estate trend to take advantage of after late 2008 is the rising demand for rental property in urban and suburban areas.

Why?

Apartments will be in relatively strong demand through about 2017 due partly to the aging of the echo baby boom generation. 

Seems reasonable, and while we may have dodged the “Mother of All Depressions” he predicted instead with the Great Recession, Dent’s view on demand may be currently playing out.

Demand will be further strengthened by the effect of the depression era on individuals who are of an age to shop for starter homes, but who must delay this purchase until the economy improves.

Stuff happens in our lives.

Second Half Dream Homes

Recall two midlifers, Johnny from Boston and David from Canada — two refugees from the cold weather who moved to Cabo San Lucas to start over.

Dent writes

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals. 

He ticks off several reasons.

We attain a certain level of affluence through the combination of high earnings and a sudden drop in necessary family expenses as children leave the nest.

What’s Important in Our Lives?

We confront our mortality, either by taking care of ill or elderly parents or by seeing the inevitable aging in ourselves. 

For baby boomers and older Gen X-ers each reason can usher in a more positive ending.

Above all, retirement looms on the horizon as an expanse of freedom that many of us, working 8-to-5 jobs, have not known before. 

All of these reasons compel us to pause, reflect, and consider how we are going to live the rest of our lives. 

California doesn’t have a corner on the market for individuals and businesses seeking pristine natural quality-of-life communities with an open and innovative social environment.

While Dent believed California would grow, other communities in the West were forecasted to grow much faster.

And without paying a high price tag for a similar lifestyle.

Dent suggested these additions to your Western bucket list.

From Hollywood to Silicon Valley, along the coasts into Portland, Seattle and Vancouver, and inland to  Utah, Colorado, Arizona, New Mexico and Texas, we see the most innovative cities in America spawning most of the growth companies.

What do they have in common?

These businesses, primarily in the fields of high technology and entertainment, are the backbone of the new information economy.

If you’ve ever lived or traveled in the West, you know there is a clear difference in culture between the western states, the east coast, and the central areas of North America.

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.