Volume 3 Number 1                                                                 January 8, 2005

WHAT ARE EXPERTS DOING?

Have you asked your stock broker where he has his money? Is he buying the stocks he tells you to buy? If he is, he should have no problem showing you his account statement. How about your banker? Where does he have his mortgage? His savings? Is he actually buying CD’s is his own bank? Ask him! If you go for tennis lessons or for help on your golf swing you would go to someone who actually PLAYS golf or tennis. Wouldn’t you? Of course, he has to know how to teach as well as play, which is maybe why the best players are not coaches or teachers. But you want to know that your advisor or, indeed, even someone trying to SELL you something, has the expertise that is needed to help you in your decisions. Be careful, however. In investing, for example, your advisor may not have the same objectives as you do. His portfolio may be more conservative or more aggressive than your objectives will allow. He may be myopic and only be looking in his own briefcase. I get a kick out of promotions by stock brokers that offer to review your entire investment portfolio and optimize your investments to fit your objectives. Somehow, they always forget to mention real estate.

One of the successful stock brokers in the Fort Myers area got his background selling cars. My wife and I knew him well. He was an expert at networking. Apparently he was an excellent car salesman.

So good, in fact, that a national brokerage hired him to sell stock. He was an expert in sales, not investing in the stock market. He is, however, an excellent communicator. But he is certainly not a stock expert. Perhaps he does not have to be an expert in stock picking, but he should know where to get the best advice in his organization and how to communicate that to you. I never did ask to see HIS portfolio, and I also never invested with him.

If I am going to invest in real estate, I want to go to someone who has the expertise that I am looking for. For example, if I want to buy a shopping mall, I would like to deal with a guy that specializes not in just in listing shopping malls, but one who has purchased and had success running one. If I am going to buy a home in a wealthy area, I would prefer an expert in that area to guide me around. Furthermore, I want someone who lives like me, and has the same tastes and needs I do. It might be the same shopping center guy, but probably not. In some purchases, a sophisticated sound system is a good example, you can get very good advice from a young sound geek that may not be able to afford the dream system you want to buy. But you may be able to count on his advice even though he can’t afford the same system he wants to sell you. In residential residences you can also get advice about a geographical area from someone very knowledgeable about the area, but who may not have the experience to negotiate your contract for you, or afford the second home you are buying.

My main point for you is this; seek out the advisor that has actual experience in the area that you may be lacking. Not just the knowledge – get someone who has DONE what you want to do. And if you are in the business – stick to your main area of focus and seek associates and other advisors to support your weaker areas.

A further note. I no longer invest in residential income properties. My objectives have changes and my financial maturity has brought me to other avenues. But I have done a great deal of income property investing in the past. I have the experience in residential and indeed commercial income properties, but not the current portfolio. Kind of like the tennis coach that is a retired pro. We can still teach and advise, and we know a good thing when we see it. Now, because of all the activity at Brixton, I no longer have the time or need to invest in preconstruction condos down here. However, I did make an investment in Chicago this week – a preconstruction opportunity on the Gold Coast. My objectives there are similar to many of you who may want to invest down here: Gail and I want to have a place to get away to. I believe prices will continue to go up. My plan is to close in 18 months, furnish the place and use it for two years or so and then, depending on circumstances, sell it or rent it out. I feel that my 10% will leverage nicely with appreciating values in Chicago. I made sure that I bought one that I believe will resell well. (If you want one – there are some left – give me a call – prices start at $800,000.) The purchase contract that I signed specifically forbids assignment (like many here) but this one actually has the buyer warrant that he will use and not sell or advertise for sale before closing. Pretty severe requirement and I suspect a requirement that the bank made the developer put in (Makes us look like Pussycats here).

Each Thursday in Fort Myers the local paper has two real estate sections. This week it was loaded with full page ads for more developments. Again, here is where to watch for most preconstruction in Fort Myers disappear immediately. Tatiana, Debbie and Bob went to the opening of Sandoval this week. BUYERS WERE TURNED AWAY AT THE DOOR if they did not have an appointment. In other news, The Related Group invited agents from the east cost of Florida to tour their new OASIS project (no relation). They expected 50. 175 showed up…. Expect a bunch of the downtown condos to be bought by buyers from the east coast. There was even a two minute blurb about the visit on the morning news on Thursday. Cypress Club is now 50% sold out on their first tower. (BTW, When I was in Chicago I saw an for Cypress Club in CHICAGO magazine.) Palm Point, Brixton’s waterfront mid rise on the river is still in design stages. I believe we will have a central tower with private elevators (The elevator opens directly into your unit). There will be three towers (one building), four condos in the North Tower, four in the South Tower, and two in the “River Tower”. The tag line, “DOWNTOWN HAS A BEAUTIFUL SKYLINE, TOO BAD YOU CAN’T SEE IT FROM THERE – WWW.PALM-POINT.COM” was presented to me by Tatiana – what do you think? A little too in your face? Note that the site plan on the web site needs updating and we do not have the new plan yet. We were originally thinking of two towers. But I believe we will sell out on release since we only have 88 units – and one building makes more sense. Island Pines will have more units released on the 15th.

Look for Brixton to announce two new projects – One in Englewood, one in Naples. Gregg GFous@brixtondevelopment.com

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