Okay readers, prepare yourselves for the first of several Money Show seminar reports I've been promising you. This one's about my idol, John T. Reed
, and his seminar on what he's learned after several decades of investing in real estate. I like this guy because his writing is clear, honest, and extremely well-researched. That is a rare set of qualities in the broad world of financial commentary.
John briefly recapped his career as a property manager, broker, and author. Much of his introductory views of real estate are a reflection of what he's written in his free articles online
and in his book How to Get Started in Real Estate Investment
. One of his best insights is that real estate investors should follow a strategy comparable to private equity investors by purchasing homes to which they can add value for resale (i.e., turning "disasters into fixers"). Leverage is okay if you can get it on your own terms, with no balloon payments, restrictive terms, or unethical options.
I'm a close reader of John's current articles on the financial crisis and other headline events
. I couldn't pass up the chance to ask him about his endorsement of foreign currency holdings. He has described in detail his efforts to open accounts in banks domiciled outside the United States, so I asked him what he thought about owning foreign currency ETFs in a U.S. brokerage account. John was skeptical of the concept on the grounds that even if the ETFs in question (the Guggenheim CurrencyShares ETFs
) are held in a custodial account in the UK, that country isn't on his preferred list of safe havens. John has thought through the legal implications of non-U.S. accounts. If I were to add one more hedge to my own U.S. dollar exposure, I would hold New Zealand dollars in a bank account domiciled in that country. John courteously provides his readers with the contact info for a New Zealand banker who is willing to work with us oddball Americans.
I will need a foreign bank account or two if those ETFs don't work as advertised. Guggenheim has announced the closure of two of its currency ETFs
, which means their assets can be forcibly distributed to investors. That doesn't happen when you hold cash in a foreign bank account.
Aspiring real estate investors will benefit from John's checklist-driven approach to managing risk and hedging against adverse actions. I suspect his methodology is derived at least in part from the checklists he had to navigate as a West Point cadet and U.S. Army officer. BTW, John, thank you for your military service, from one who currently serves. You may not need to hear that, but I needed to say it.
I am very interested in pursuing the investment strategies John identified that fall short of outright ownership of managed property, like liens and easements.
I can't do justice to the enormous wealth of knowledge that awaits real estate investors in John's material. You folks will just have to buy his books and follow his articles. I have purchased several of John's books myself:
- How to Get Started in Real Estate Investment
- How to Protect Your Life Savings From Hyperinflation and Depression
- How to Write, Publish, and Sell Your Own How-To Book
I consider those books to be among the most important I have ever read in my life. I have read them cover to cover several times and highlighted the passages that I use as active references in my financial decisions. The starter book on real estate gave me some strategies that I'm actively pursuing. Succeeding
is something I wish I had read as a teenager because its points on matching your career to your natural strengths would have saved me a lot of grief many years ago. The Hyperinflation
book is the kind of tome that comes along once in a lifetime and is worth reading if you intend to survive the years of turmoil that have just begun to afflict the U.S. economy. I have been following John's admonition to "buy everything you need for the rest of your life, right now" since the summer of 2011. Check out his description of liquid hard assets
if you need to start making a shopping list. I can now ride out several years of product shortages, logistics bottlenecks, and wage-price spirals in the U.S. thanks to John's suggestions. I still need to find some "junk silver" for my hard asset portfolio. I really like the self-publishing book but I plan to use it in a different way than what John intended. You see, the e-publishing revolution means people can buy e-books on impulse for their Kindles and other electronic book readers. Having an e-book publishing presence IMHO leaves a much lighter burden for the self-publisher by eliminating physical inventory and other headaches. Hey John, consider writing an updated version of HTWP
for the e-book era.
I will disagree with one of John's chapters in Succeeding
. John is a big advocate of marriage and argues that there's someone for everyone. I simply do not trust anyone enough to want to share my life with another human being. I cannot afford to waste one more minute of my life with people who treat me poorly or do not want me around. Some of us were meant to be alone.
I was absolutely thrilled to hear John T. Reed in person and I even praised him to the Money Show lady who was prepping him for a video interview the next day. I respect this man's diligence and integrity, and that is why I take his writing very seriously. Please note that he hasn't paid me anything at all to say this, even though his wisdom is priceless.
Full disclosure: Long positions in FXA and FXC with covered calls; short position in cash-covered puts under FXF.