Crossroads and confluences


Chilled waters race an ancient Blue Ridge course whispering quietly through fields, deep laurel and wood. Suddenly spilling on massive boulders this wet sonata turns swiftly white roaring coolness through its canyons of antiquity.

Little Horse Creek makes our farm a wonderful place to be rushing through the summer green. When I find I have so much to do, that there and no way to get it done, I stop and go help a neighbor in need. Suddenly I find all the time in the world. I call this the law of priming the pump (more on this in a moment).

So the other day inundated with work, I stopped, stripped off my shirt and mowed my next-door neighbor's field. She is one of the sweetest ladies we have met, over 80 she spins so many tales of these mountains that we can listen for hours, but she suffers from arthritis and the weeds and grass at here place had grown taller and taller. In a couple of hours, I managed to make a dent in her field. This felt good, but I was hot having worked up a real sweat.

Time for a cool dip in the creek. There is nothing quite like this on a summer day, when you are covered with grass clippings and sweat.

One of the best places to do this is at a conjunction of Little Horse Creek and Mossy Creek. The two rushing streams come together and they have gouged a deep pool just below their conflux. You can see the trout swimming there and Merri and I stripped off, jumped in and joined them.

The creek looks and smells different when you are almost submerged and look up at the water rushing down, so fresh, so full of energy. As I sat there in the cooling water I could not help but think about the power in crossroads and confluences. These are the places that stir up everything, and they use turbulence to keep everything from getting stale.

This is why I am always watching for two or three things to come together. When they do, I take heed. This is why this message shares a thought about tax liens and repossessions.

Last week's messages – see http://www.garyascott.com/market/608/ and http://www.garyascott.com/investing/609/– looked at how the last century has seen three thirty year stock market waves (15 up and 15 down) affected by war and technology. We looked at seven ways to invest in the currently troubled times. One of these seven areas that offer great potential is real estate. If history repeats itself some time not too far ahead we will enter a period of inflation and this should push real estate prices higher. This has happened after each of the three U.S. bank crises of the past 100 years.

In addition several other factors should help push real estate prices up. First WWIII (fought in the 80s by R. Reagan and M. Thatcher versus the evil empire) was a cold war. Millions of young potential home buyers were not killed and taken out of the market. Now their kids are at the house buying stage and this may be one reason why housing prices have remained firmer than expected in this recession. Secondly we are running out of natural resources, especially wood. Homes cost more. Third we grow more aware of this so homes become even dearer.

However there are some downsides we also have to watch. First, Americans are deeply in debt, and have pledged their homes. The recession could turn worse with the banking crisis and if so there may be many homes on the market.

Second, the three most important facts that determine the value of all real estate always have been and remain, location, location, location.

Great places to be by the way are places that will be good locations, but are not now.

All this was rambling through my mind as I sat at the conflux of Little Horse and Mossy Creek and thought about how three incidences relating to real estate had come together for me.

First, one of my best friends, Steve, (we had our first job working together about 40 years ago busing dishes at the Old Country Kitchen-Portland's home of the 72 ounce steak) jumped into the business of buying property at the county courthouse steps. I was impressed. While I left Portland and traveled the world, Steve stayed, started building houses, duplexes, apartments, modular housing estates and made a fortune. He knows real estate like the back of his hand so this started me thinking about investing in tax liens and repossessions.

Second, a long time acquaintance, Ted Thomas, recently attended one of our seminars and while talking to him I learned that he specializes in teaching people how to buy repossessed property and invest in tax liens.

Then recently, a broker who helped us buy the farm called us and told us that we had a tax lien on our farm! Turns out that the lawyer who helped in the closing screwed up just a little and the taxes for the year we bought were not paid. This was not my fault and I tromped off to the courthouse to see what I could do. I had to pay the tax and about 40% in late fees (for less than three years). I learned on the wrong end of the stick how safe these liens are for those who hold them.

All this led me to an important conclusion. There are many reasons why we should invest in real estate now. But there is risk. However, even if prices fall, if property is purchased at a really low prices (on the courthouse steps) a lot of risk has been reduced.

So if you are thinking about buying real estate in a great place to be, consider buying property through repossessions and foreclosures. This can reduce risk and increase profit which is a really great place to be!

Until next message, may wherever you are be great.

Gary


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