Space, time and money-making real estate

MOST wealthy people have more intense love affairs with their investment real estate portfolios than their homes. Why is that so? The inflow of rent from investment real estate makes us richer while the ceaseless running costs of our personal abodes mean they are minor cash sinks at best or major money pits at worst.

Since the affluent are economic overachievers, it makes sense for us to invest time gaining an understanding of real estate’s allure if our goal is to either become well-heeled ourselves or to grow wealthier than we are now.

Back in 1957, the year the United Kingdom granted Malaya independence, a no-nonsense American real estate investor Louis Glickman declared: “The best investment on (E)arth is earth.” (Coincidentally, that was also the year the USSR launched Sputnik 1, humanity’s first artificial satellite.)

Glickman died at 94 in 1999 (read about the colourful philanthropist and real estate mogul in this New York Times piece: www. nytimes.com/1999/06/21/nyregion/louis-jglickman-94-investor-linked-to-carnegiehall-deal.html.) I think he was only partly right despite this recycled piece of advice about that excellent investment asset class:

“Buy real estate! God isn’t making anymore!”

The phrase is catchy and memorable. It’s also untrue (for the universe as a whole).

Cosmologists confirm we live in an expanding bubble of spacetime sprinkled with stellar nurseries endlessly birthing new hydrogen-to-helium fusion furnaces we call stars — many of which will see the formation of orbiting exoplanets (worlds outside our own Solar System).

Closer to home, maverick billionaire Elon Musk is serious about jumpstarting the mass colonisation of Mars by 2040.

There will be inevitable setbacks, yet even the late theoretical physicist Stephen Hawking shared Musk’s burning conviction (see https://tinyurl.com/ HawkingOnColonisation):

The human race must evolve into a multiplanet species to avert looming extinction within 100 to 1,000 years.

Big Brains

The true conquest of space will mean abandoning brief, old-style Apollo programme visits to the lunar surface for longer term missions of exploration, research and economic expansion involving, first, space tourism, and, later, permanent mining operations on the Moon, Mars, the asteroid belt, and Saturn’s largest moon, Titan.

All this will take humanity a century or two to accomplish, which means we can merely lay the groundwork for the next three to eight generations to spread across a reasonable swath of our Solar System.

And we will undoubtedly fail if we only squabble about petty terrestrial issues and not pour sizable resources into ensuring humanity’s survival. (To learn a little about the possibility of humans colonising Titan, read this: https://en.m.wikipedia.org/ wiki/Colonization_of_Titan.)

However, be warned: Those big, bold, bright ideas will never see the light of day if we bring forward our extinction or, marginally better, just knock ourselves into Stone Age 2.0 after some version of Armageddon involving nuclear holocaust or germ warfare.

So, it’s good that at least some of our leading Big Brains are working on solutions to the real or potentially growing threats of pollution, pandemics, global warming, asteroid strikes, malicious AI (artificial intelligence), regressive racism, demographic ageing and sectarian violence.

Unfortunately, much of such research is stifled by insufficient funding. Given the rise of dysfunctional governance in too many countries, the only viable way forward might be enlightened private enterprise and individual philanthropy.

Which means regular people with long range vision also need to work on massively increasing their personal wealth so that some portion of their private monetary surplus may be channelled into scientific research and technological innovation.

Sadly, most of us are focused on merely scraping by in a challenging world economy that grows more treacherous to navigate with each passing day.

Economic survival

That’s why those of us who wish to take a page out of the playbook of the superwealthy should explore investing wisely across diversified asset classes, including investment real estate.

Which brings us back to my minor contention with Glickman’s “earth” quotation.

For decades, financial guru Robert Kiyosaki has taught audiences and readers that real estate should be structured as a system or a standalone business.

For any business to succeed it must generate revenue or turnover from the sale of economic goods or services in excess of its expenses. That surplus is called profit.

Profits are crucial for economic survival and continued viability, a simple conclusion that eludes misguided socialists and, worse yet, pure communists.

I make no apology for being a card-carrying capitalist despite the many shortcomings of unbridled capitalism.

As retired economics columnist Robert J. Samuelson wrote in Newsweek in 1996: “It can be said of capitalism what Winston Churchill once said about democracy — it is the worst possible system, except for all the others.”

Many capitalists start businesses that create profits and jobs. A high proportion of those successful women and men then invest in real estate with sterling results. So, take note:

Sound investment real estate usually hinges on securing tenants that pay us, their landlords, consistent rent. However, it’s also possible to focus on the business of buying cheap fixer-uppers and flipping them for capital gains.

Therefore, over the coming fortnight we’ll explore the basics of direct and indirect investment real estate.

Stay tuned as we explore integrating your real estate visions with the reality of your current circumstances and your goals for brightening your future through deepening knowledge.

Read his free articles at www. FreeCoolArticles.com; he may be connected with on LinkedIn at www. linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on Twitter @Rajen Devadason and on Clubhouse (Rajen Devadason).