Oh Baby Baby It’s a Wild World
Mark Rubin
[Note: I wrote this piece in February, and it got lost in a shuffle.]
With a nod to Cat Stevens aka Steven Demetre Georgiou (at the outset) and Yusuf Islam (now), Oh Baby Baby It’s a Wild World.
I encountered two real estate situations in the past 10 days. I can’t provide details about the first, due to confidentiality concerns. However, I urge everyone to interpret If You See Something, Say Something® broadly. (Allen Kay created the tagline for the New York MTA.) Regarding the matter I can’t discuss, neighbors paying attention likely helped someone avoid a terrible outcome. Our lives touch vulnerable adults constantly and too many fall prey to greedy, evil people. ‘Nuff said.
A few days ago, I received an email request from someone associated with a seniors organization, advocating staying active late in life. The message asked me about posting an article here, on the merits of “house flipping as a good way [for seniors] to earn income.”
Uh, no! I will not share this virtual space for that pitch. I have dealt with flippers on and off for decades. Outcomes vary but it takes at least my 10 fingers and a few toes to count the significant failures I am aware of. This stuff is hard!
- Every house offers surprises – no matter how well an inspector inspects – and most properties that provide opportunities for profits have been vacant, occupied by irresponsible tenants, or vandalized.
- Success requires knowing how to spend money most effectively. Redoing a kitchen or bathroom might be fun, but if the return on investment is nil, a trip to Europe offers more pleasure.
- People who make money do their own construction work or know enough to avoid mistakes concerning who they hire, quality, and cost.
- Timing matters greatly. A few Fed meetings which ended with Fed Funds Rate increases of 75 basis points have dramatically chilled what was a hot housing market.
- Seniors need liquidity for unexpected events, as their incomes generally fall off with retirement. Real estate is inherently illiquid.
- Time is not a senior’s friend when it comes to recovering from a capital loss, whether it’s realized from a bad real estate deal, or unrealized due to a market downturn.
I have not mentioned the name of the person who contacted me, or the organization. They might be well-intentioned and misguided, or not, and the website offered nothing about motives. In any event, the notion that someone might encourage people to engage in risky real estate transactions chilled me.
This piece stands alone but, I think, it provides some perspective on Balloons, Balloons, Balloons!, posted on February 15, 2023. Increasingly, balloon fears appear to be overstated. We’ll see, for sure, but the hot air on the issue would likely power a flotilla of very large gasbags.
On the other hand, bad actors help seniors part with their money every day, everywhere. Their actions endanger personal security and leave people scared and anxious. And bad decisions – choosing flipping houses, for example, to supplement Social Security – will generate similar outcomes far too often.
It is a wild world out there. Be careful and pay attention to those who exist in your ambit. You can manage lots of risk if you focus on what you can control. Your attention might really matter!