Another Silly New York Times Real Estate Piece

The New York Times is probably the last place I would look for any kind of real estate advice. Why? Because journalists don't work in the industry, they just report about it. They aren't privy to the nuances of deals or day to day life in the industry. They find a few examples of what they're looking for and they write a piece off of it. They mix up data, most notably about the state of rental prices. This piece, about real estate being a taboo subject, is as ridiculous as it gets.

Real estate was never intended as a short-term investment, which is unfortunately how it has been perceived over the last five years or so. Even if you bought a place in Manhattan and you paid one of those high prices, relax. If you really want to see a return on a real estate investment, you should hang on for about 10 years or so. Some people would say five, but it depends largely on what you bought and where. Think about all the people who bought in Manhatttan the 1980s, had to live through the recession of the early 1990s and then sold in the late 1990s and made a profit. We're facing almost the same thing now.

In the wise words of Kenny Rogers: know when to hold 'em and know when to fold 'em. Right now: hold. It's all you can do. And stop complaining about the market. Believe it or not, people are still buying and selling places everyday. They're just not doing it for sport the way we were a year or two ago.

Don't Even Say The Words

Perhaps This Is A Trend?

Today I got an e-mail from one of my clients who had given me a listing about two weeks ago. His apartment, an amazing 820 square foot one bedroom in prime Murray Hill on 35th and Madison, had been on the market for sale with another broker for over six months. It had a doorman, a proper foyer and a sunken living room with a dining area. The open kitchen was modern with granite counters. He had finally gotten one low ball offer on the place and was willing to turn it down if he could find a solid person to rent the place for a year or so. I would have one week to find said person.

I took the listing and a few of my colleagues actually did take people over, one of which was considering renting it. When my client called me back, he said that he accepted the offer to sell apartment after all, and the buyers were putting money in escrow.

It was a shame. My client, we'll call him Mike, spent a few years working at J.P. Morgan, originating loans. Needless to say he was one of the first to go when all the sub-prime nonsense hit the fan a year ago. And so, for a year he putzed around his Art Deco gem of an apartment, the one with the original parquet floors and working fireplace, trying to find a job. On nice days he sat on the roofdeck and gazed at theEmpire State building, or the Chrysler building, depending on which way his chair was facing. Finally, he found a new job, but it was with a small bank in Chicago. A regional bank in the Midwest is a far cry from J.P. Morgan in Manhattan, but I guess ya gotta make a living.

I've started to wonder if there are others out there like Mike. Guys (and gals) who worked in these investment banks, collected the big checks, only to be left out in the cold once the layoffs came around.

When I first met Mike I could tell he didn't want to sell the place. He had only been there for two years! Guys like Mike are the real estate equivalent of the Girls Who Were Sent Away in the 1950s and 60s when they got pregnant. Guys like Mike bought trophy apartments with their bonuses, only to have to sell them for peanuts, quietly and discreetly, as they were forced out of town for another, less glamorous job.

Maybe it was a need for closure that made Mike accept the offer. Maybe he needed the dough. I wonder, though, how many other people from places like Bear Sterns and Lehman, will have to leave town and their real estate conquests behind, not to mention large parts of their egos.

New Huff Po Blog: Do You Know Where Your Money Is?

My latest column on The Huffington Post is about how important it is to be proactive about all areas of personal finance, especially so during a recession. I handed my taxes off to a CPA who slopped it together and then took off for a vacation on April 16th. It was not a good scene.

On The Eve Of A Recession, Do You Know Where Your Money Is?