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Sunday Digest
Edition XI

It’s a beautiful Sunday morning and my second dose of caffeine is working magic on my brain. Caffeine is also working its magic on the Starbucks economy. Seeing the line-up of people waiting for their morning joe at favored coffee spots is both refreshing and surreal. “Re-opening” is gaining momentum, and the risks and rewards will become more apparent in the days and weeks ahead.

The week saw time fly as we continued to experience extreme volatility. With protests across the land, violence in the streets, and the economy heaving and compressing, making it to another Sunday is comparable to completing the Boston Marathon in record time. Now that we are here, hopefully safe and healthy, here is my take on how things have unfolded:

  1. Income property owners are organizing and fighting back against the hastily implemented government policies that allow rental payments to be deferred without compensation for landlords. A primary example of what may soon become commonplace is a fresh lawsuit filed in federal court by the Apartment Association of Greater Los Angeles, which argues that such revenue restraining government policies are a violation of the 5th Amendment of the Constitution. A government safety net for tenants without compensation for property owners is an irrational and reckless policy. Fasten your seatbelts…the weeks and months ahead will be a very bumpy ride through the courts.
  2. The beginning of the end of Phase 1 (denial) for real estate investment has arrived. This time around in our changed world, property owners are not entering Phase 2 in prayer…they are fighting. But, for those who are standing on the sidelines with their dry powder ready to pounce – not so fast. I suggest it may be best for opportunity-seekers to sit in a comfy sofa and be patient with all of that dry powder close by.
  3. This week for stock market investors was more exciting that any ride offered at Disneyland. Unfortunately, trillions of dollars lost and gained in a matter of days is not fun, it is a danger signal. This lack of stability in the markets is unnerving, especially now when calm is sorely needed.
  4. We are deep into election season and there is much at stake. Income inequality and unemployment are key economic issues, with various solutions being discussed and debated by the candidates. There is no magic bullet that will bring swift resolution to these issues. A New Deal approach may prove to be a viable option. Stay tuned.
  5. Excellent real estate investments are not found, they are made. With a keen eye and a sense of the opportunities that our changed world has to offer, the next few years may prove to be as good as or better than any time we’ve seen in the past.
  6. Just like a good oil well, great investment real estate is the gift that keeps on giving. Pumping out cash without being taxed has turned real estate millionaires into billionaires. Just like oil wells that are shut down from time to time for needed maintenance, investment properties also experience down periods. When back online, a great property, just like a good oil well, keeps on pumping.

We are currently experiencing the early stage of a new reality, with many challenges both known and unknown. America is the greatest example of a free and democratic society that the world has ever seen. As we forge ahead confronting our challenges, we strengthen and thrive. That’s us, the United States of America. United, not divided!

Warmest regards,

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Lawrence N. Taylor

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