Monthly Archives: August 2009

The 1,119-Day Real Estate Sabbatical

my balance sheet needed a sabbaticalI have a good friend who works for Intel.  Every 7 years the company gives him an 8-week sabbatical with full salary and benefits.  He will start his sabbatical, the second since he began working there 14 years ago, in the fall.  Intel does this so their employees can rest and recharge.  Studies show job burnout usually occurs within 5-7 years of hiring.

I just came off of my own sabbatical.  On July 7th, 2009 I bought my first residential property in more than three years.  The truth is it wasn’t my mind that was burnt out and in need of recharging, it was my balance sheet.

As a sat on the sidelines and pondered what went wrong in 05’-06’ I came to the conclusion that in order to have sustained success in real estate I must adopt multiple investment strategies.  My new plan incorporates these three strategies, with a single underlying theme, that can help weather any real estate storm and provide stability for outside investors:

  1. A debt-free, fix and flip model that provides short-term cash in 45-60 days.
  2. A buy and hold model that operates debt-free and provides long-term cash flow.
  3. A management company that doesn’t carry any debt, registered by the SEC, that provides investment opportunities to accredited investors.

Investing in real estate without leverage?  I can vision your eyes rolling as I type this post.  Believe it or not, the most successful companies operate without any debt.  According to an article from the USA Today late last year titled ‘Companies with no debt fly high’, Microsoft, Walgreen, Gateway and Ross Stores all operate with no debt.

You can’t argue their success.  This time around it’s debt free for me. 

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