Sometimes Doin’ Nothing Is The Perfect Thing To Do — Be A Quick Study
From year to year, the range doesn’t change much, though in extreme times, it skyrockets. I’m talkin’ about the percentage of people I counsel to sit tight. Don’t do anything. Cool it a bit. It consistently remains in the 30-40% range, give or take some. The main reason? Aside from those who simply don’t sport the required capital, the reason used most by me for that counsel is lack of cash reserves. Over the years I’ve called it the ‘Sominex Account’. Sominex, for the Boomers’ kids was (still is, I think) a brand of over-the-counter sleeping pill. Yeah, I know, pure corn. Cash reserves allow you to sleep better as an investor.Much of the so-called new and improved thinking pays little homage to the concept. Murphy is some guy your grandpa used to ramble on about. Somethin’ about bad luck, right? If anything shows respect for the inevitable, it’s having generous cash reserves as a serious, long term real estate investor. Though the last one happened over three decades ago, I’ve lost three properties. Wanna know a secret? All three were a direct or indirect result of having insufficient cash reserves.
There isn’t a substitution I’ve found, except for the presence of richer than God, Aunt Ethel. And she’s way too smart to be your backup. Folks often think I only tell newcomers not to invest due to this principle. Not so. I tell ongoing clients all the time. Matter of fact, I saw me do it twice just this past weekend. Things change, Someinex Accounts dwindle. When this happens and they call to tell me they’d love to acquire more property, I ask the question.“How’s your Sominex Account doin’ lately?” “Well, (fill in the blanks here), so it’s down to around half of what it was.”It’s almost always at that point I tell ‘em not to buy any more real estate ’til that account is built back up.