Friday, July 21st, 2017

 Return to the Kanagaroo

by Stu Silver/Zalman Velvel

Once again I’m at the Kangaroo Convenience Store in Ocala, Florida, and it’s mid-August. I’m sipping coffee and nibbling on a strawberry cheese muffin. I had my first cheese muffin two weeks prior, and now I’m a connoisseur, trying out different flavors.  (You can’t taste the cheese or the strawberry, but it is one of the moistest cakes ever made.) It was six in the morning, the sun was not up yet, and once again, the gas pumps were crowded with vans and pickup trucks. There was no room at the two metal tables outside, so I stood by my car, sipping and nibbling, wondering what I would write about, and thinking of my friend, Dovie. As I drove back to our newest investment, a lakefront mobile home park, the topic came to me, once again supplied by the good old Kangaroo.

 

Peggy, the middle-aged woman at the register, asked while ringing up my coffee and strawberry cheese muffin, “Do you make silver?” She pointed to my T-shirt, which had the name of our company, Silver & Silver, on it.

 

I thought, the only silver I ever made were two daughters and a son, and the six grandchildren that followed. (I only had a supporting role.)

 

“No,” I answered. “We don’t make silver.” Then for some reason, maybe it was the smell of the 10 pots of fresh coffee Peggy had just brewed, I elaborated. “The only silver I ever owned were two bags of older U.S. coins. I bought them for $24,000 apiece in 1980, and then sold them and lost  half my money a year later.”

 

“Oh,” Peggy answered. She did ask what I did with the money after I sold the coins because there was a guy in a leather jacket, holding a motorcycle helmet, waiting in line behind me who had to get to work, and he wasn’t the slightest bit interested in my silver investment.

 

I thought back to the man that sold the silver to me, then bought it back a year later. He was a short, nervous guy with a small store in Manhattan. He carried a gun on his hip, and had the eyes of a vulture. A rich vulture. He was interested in what I was going to invest the money in.

 

“Real estate,” I answered.

 

“Real estate? What’re you crazy?!” he said. “That’ll turn your remaining half into a quarter. Leave your money in precious metals. They’re bound to go back up.”

 

If you think times are unusual now, let me tell you what was happening back in those thrilling days of yesteryear, 1981, almost 30 years ago. Mortgage rates were at 15-20%. Real estate was not selling, and I bought 2 year U.S. Government Treasury year notes at 15%. That’s right. 15%.

 

I took my remaining $12,000 and bought half of a four-family apartment building located on the corner of Bismark and Benziger Avenues in Staten Island, N.Y. with my father-in-law. That’s right. Four units for $24,000. I knew zip about real estate, but my preliminary calculation told me that the $7,500 I would net each year from my share of the rents was a 60% return. Eight years later, when we sold the building for $143,000, and I netted $70,000, my final calculation told me I made almost 6 times my money back in profit, in addition to the 60% I earned each year in rent. I had no clue as to what I was doing … but it just made sense on some sort of instinctual level.

 

In contrast, when I bought the silver, I knew exactly what I was doing. I had been working on Wall Street for ten years, and I read four newspapers each day, ten investing magazines and newsletters each month fill with Nobel prize-winning economists, and conventional wisdom  said to buy precious metals and keep away from real estate. Silver went from $24 an ounce, when I bought, to $12 an ounce, when I sold. A few years later, silver went to $4/ounce. It would have turned my original $24,000 per bag of silver into $4,000 per bag, if I stayed invested. (Now it’s up to $18/ounce, so I never would have recouped my investment, even after 30 years.)

 

Why am I bringing this up now? Peggy asked me if I made silver, and it made me think of the experts I have listened to in the past, because those same sort of experts are giving the same conventional wisdom now that they were offered 30 years ago, when they said:

 

“Real estate is a terrible investment, gold and precious metals are the safest, and the U.S.A., and the world, are going to hell in a hand basket.”

 

I finished writing this article in one of our cabins overlooking the lake in our newest investment. I looked the front bay window and watched the birds soar over the water, as the sun came up, and I wondered why I just can’t seem to make money with conventional wisdom. The newspapers, the economists, and the authors of investment newsletters are predicting the sky will fall, followed by end of the world.

 

Against all this wisdom, my friend Dovie and I are buying mobile homes and mobile home parks. We figure, when we get together, bend down, and pick up the pieces of sky that have fallen, there will still be people who need affordable housing and will want to live in our mobile homes and mobile home parks.

 

What do you think?

 

 

Author and trainer Stu Silver, CCIM, is a Licensed Real Estate Broker and Mobile Home Dealer. He has 30 years of experience in Real Estate investment, 28 years as a Realtor, and 18 of those years specializing in mobile home investment. His family has real estate holdings that include 600 rental units, comprised of 12 mobile home parks, warehouses, mini-warehouses, outdoor storage, offices, single family homes, duplexes, and motels.  He has conducted 3-day live trainings and Internet Distance Learning on Mobile Homes and other Real Estate Investments to over 5,000 enthusiastic clients all over the country.  His books, which he writes under his pen name, Zalman Velvel, are Mobile Home Wealth and Mobile Home Wealth Part 2: Mobile Home Parks, are available on www.MobileHome.com .