Question: Where is the worst place to own a business in Port Angeles? Answer: Right next to a bridge that is being replaced when the construction may take an entire year. Eghad!

Imagine having a business on 8th Street in Port Angeles near the 8th Street Bridge, which is being replaced right now. You’re at a dead end with the bridge out, so virtually no one will come to your place of business during construction–for a year! Of course, as you gaze into the deep deathlike valley below the non-existent bridge, the large sign states, “8th Street Businesses are Open During Construction.” Yea, that’s pretty funny. No?

I recently recommended to one of those business owners, who wants to sell, that she just hang on. No one wants to buy, and if they did, it would be for a song and a six pence. (How much is a six pence anyway?)

It gets better. Imagine having a business on 8th Street between two bridges that are both being replaced at the same time. I would guess some of those business owners feel like playing Russian Roulette. Working on a French slave ship doesn’t sound so bad anymore.

Lesson for the day: Be very very careful where you buy a business property. Yes, location is everything, almost. There are only a few big rules in life, one of them being, “Never get involved in a land war in Asia.” Now we know the other one, “Never buy property next to a bridge, but never never buy property between two bridges.” [Rule 113 of Real Estate Investing for Smart People]

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Some Sequim real estate and Port Angeles real estate owners are looking at serious financial trouble on the horizon. Many property owners refinanced not once but several times in the past five years as the mortgage industry reduced rates and standards. Lower rates created the motivation to not only lower the monthly payment on a long term mortgage, but to keep pulling out cash.

While all that sounds like a free lunch, we all know there’s no such thing as a free lunch. Refinancing to lower the monthly payment is great, provided the term of the amortization is not increased, and provided money is not taken out that could go toward reducing the mortgage balance.

Alas, some local businessmen and homeowners are now concerned about their debt service, and this really hits home if the current state of the economy has reduced income. It has for some businesses. In any slowdown, cash is king.

This will present a rare opportunity for real estate investors with cash, and it will also give home buyers with cash or good credit a rare opportunity to buy homes from those who are in trouble. This spring will see new buyers coming from California, Arizona, and the Seattle area shopping for good deals. One aspect of buying and selling will become more important than any other: negotiating experience in this kind of market. The difference could be $10,000 to $50,000. That’s not pocket change.

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It’s much easier to talk about making a million dollars than doing it. Many of my clients have made their money in real estate. Some admit they got lucky in stocks. For a lot of good folks 2000 and early 2001 was the year to become an investor in stocks, and pile up massive capital gains in hot new tech companies. And then, the market tanked, and millions took huge losses very quickly. One estimate is that over $4 trillion dollars was lost. There was a lot of damage to retirement accounts, much of which has never been fully published.

Having been a Real Estate Attorney (retired now) and currently a full time Realtor, I have been a strong advocate of investing in real estate since around 1976. During my law practice years in the 90’s to best serve my clients, I expanded my legal services to include estate planning, and to raise my competence, I became a Registered Investment Advisor and Certified Estate Planner. I spent a small fortune on specialized education and training.

I also traded stocks extensively with my personal portfolio, including short to long term, and conservative to risky, traditional Dow stocks and NASDAQ stocks. I day-traded stocks including IPOs (initial public offerings), and . . . yes, I day-traded the riskiest NASDAQ options. Wow! Talk about a rush! Fast profits! Fast losses! I didn’t need drugs.

Riding the crests of the market and surviving the valleys has clearly demonstrated the value of one of the oldest investment principles around: diversify your investments. I’ll take that principle one step further.

1. Diversify your investments.
2. Make real estate your primary investment.

There are many other important investment principles and practices, but my emphasis here is that real estate is, and always has been, one of the safest and best long term investments in history. It doesn’t evaporate when the economy slides into a recession. It doesn’t lose its usefullness because international money markets are in a state of chaos. You’ll always have something you can walk on and “appreciate.” Tech stocks can appreciate incredibly, and part of your portfolio should be there, but as we all know, tech stocks can drop from $88 per share to nothing as did E-Toys back in 2001.

Retirement planning is more difficult today than it has ever been for many reasons. Keep doing what you do well and get good advice on your investments. Diversify but make real estate your primary investment. Even real estate markets rise, plateau, and sometimes even decline, but over the long run, real estate is the best investment you can make in my opinion.

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