While the rest of the country swelters, I’m wearing long pants, socks and two thermal tops. Welcome to summer in San Francisco. I live close to Lone Mountain near Geary Blvd.  Most days, especially in the afternoon, the wind from the ocean races up the broad expanse of Geary avenue, when it hits the hill it whips all around the side streets making it seem even colder than it is. Night before last I went to a real estate seminar in downtown San Francisco (one takeaway from it: the subprime mess is going to add a year or two to the downturn) and when I got off the bus I was almost blown off my feet. You could see masses of fog gusting past. Brrrr.

It is days like this that make me think it might be OK to be forced to live in Florida because I can not sell the property I own there. I’m seriously considering it doing it in six months if the market is still soft. I would save on the rent I pay here and not live in a drafty crumbling building. This building is a total tear down and is only worth the land it is sitting on. There are gaping holes in the garage roof from the water damage. I’m subletting a rent controlled apartment and as per usual for such places, only one heater works and it costs over $300 a month to keep the place in the high 60s during the winter.  Despite the masking tape I’ve used, you can see the cold breeze from the outside moving the curtains.  Florida is warm and everything I own there is newer, has way better insulation .. air conditioning too ! People sacrafice a lot to live in San Francisco.

I was over in the Haight yesterday and ran into a large number of people who were milling about waiting to see “Martial Cage Fighting”. There was a guy in a beige suit that had textured strips that looked exactly like my bed sheets (I have nice 500 thread count ones .. but still). San Francisco is such a microcosm of diversity and it’s really interesting the look and vibe you get from a particular segment. This group looked similiar to the hard rock metal rock audience you see at shows. I’m a student of marketing and one concept I’ve been introduced is segmenting the audience not so much by their demographics (age, geo, gender .. etc) but by their interests, spending habits etc… I was wondering if I could leverage this new approach in marketing my houses (ie. the typical first time buyer who now can’t get a loan might really want to buy my house on a wrap). Something to investigate more.

Today was a bad day. It seems like my investments are not doing well at all. I was hoping to sell a pre-construction deal (now completed) for break even and I find out that nothing is selling in the area and there is a glut of brand new empty houses. It was a progression of optimism to pessimism. The builder told me it would sell for $212K within 2-4 months. I then talk to a realtor who says nothing is selling and it would take at least 6 months to sell, and oh by the way, the going rent is $150 less than what the builder told you. I then talk to another realtor who say the area is glutted with empty houses, the lots are selling for far less than they did before and that he didn’t think the area would turn around for 5-7 years. I keep asking myself why I ever got into this deal in the first place.

Holding it would cost me $300 a month if it rents. Just what I need, more negative cash flow .. I’m in it because when I tried to get out of this deal nine months ago, I would have paid at least $18K to walk away, plus lawyers fees, most likely.

The target market for these houses was the first time buyer. Well those first time buyers can’t get loans anymore …

So I decided to gaze at my stock market investments for a while. My portfolio of mutual funds and retirement accounts is doing quite well. I’ve heard that real estate and the stock market move in opposite directions, and that certainly seems to be the case. Last year my market securities were 25% of my portfolio, I just did the numbers and my 401k and taxable accounts now comprise 37% of my portfolio. That’s how much the real estate market has gone down .. and the stock market has gone up.

It’s good to step back and take these big picture views, I suppose I should consider myself lucky, I was only somewhat stupidly aggressive (although in my mind I was way overboard in my enthusiasm) in my real estate investing. I also was very diversified and spread my money around. I keep running into stories of the guy who bought 10 houses where I bought 1 and they are all in foreclosure. And the person who is negiotating short sales because the 3 houses they own are underwater … and unrentable because they need rehab.

So this is a report from the real estate investor trenches. I haven’t written for a year because it hasn’t been very fun. But maybe I can help others with these posts. So I’m going to make it a point to post regularly.