June Recap 2023 - View From The Fort

Years are starting to feel like months the older I get. Last year at this time, I wrote about my boy getting out for summer break, and it feels like a few months ago. Now here I am about to talk about summer break. Just another reminder that time is precious and to take full advantage of it. I tell my boy his years feel much longer than mine because last year was 1/8th of his life, and mine was 1/… well, let's just say it is a lot more than eight.

I get excited for my kids when summer break arrives, maybe because I remember that feeling. School's out for summer! I also get excited because I don't have to run him to school (I actually ride him on the back of my e-bike) every day. The truth is, though, the structure continues for summer break for him. It would be a constant battle keeping him away from screens if it didn't. So now, instead of dropping him off at school, I drop him off at various summer camps.

My life became much less structured once I left my old career. Those days were well laid out. Wake up, get the kids ready, get ourselves ready, leave for work, come home, eat, get the kids ready for bed, go to bed. Now I sit around in my pajamas every day, watching Oprah and Dr. Phil (is that still on?). Ok, that's not true.

We would all atrophy if we didn't have some sort of structure in our lives. I structure my own schedule these days, and this is how I like it. I watched the Arnold Schwarzenegger documentary the other night on Netflix, and he said something that made a lot of sense. He doesn't have time to complain or moan because he's too busy pursuing the things that drive him. "Be useful," his dad told him.

I am not saying you should be so busy that you have no control over your life but have a mission. Something that makes you tick and keeps you getting out of bed every day. It's the secret in life. Even if we retire early, we can't retire our minds. Be busy doing the things you want to do, not what somebody else wants you to do.

Have you noticed CEOs pushing for employees to come back more and more? I understand some of their arguments. Some of us need to be around others to share and gain inspiration. Some even say to dress professionally at home while working remotely rather than wearing a nice shirt and underwear for Zoom meetings. I may or may not be writing this in my underwear right now, but either way, I recognize the value of getting out and rubbing shoulders with people.

So what's the takeaway? Keep working toward being your own boss, but keep forward motion and keep your life structured in a way that suits you. To my boy, I say sorry, no screen time buddy, so enjoy your camps. He'll get rewarded with a nice summer vacation or two. Hopefully, it will instill an intrinsic sense of structure for the years to come. And those years? They are going to feel shorter and shorter, so take advantage.?

On to other news...

“Buying a home without a doubt is the WORST investment people can make, Says Grant Cardone.

Ok, we're doing something different this month. Usually, it is a share of some official economic resource, but today, it's cowboy, Grant Cardone, expressing his opinion on home ownership. So saddle up. I caught this article browsing recently and posted the video version here as well. I altered the math to price the house more closely to what we deal with on the coasts (actually, I should have made it $1.6M), but no worry, in the video, he uses a $576,000 price tag for his example if that is more in line with your market. So without further ado, here is the essence of that article.

Could it be due to people's limited financial education or the overwhelming pursuit of the American dream? Regardless of the cause, Cardone, popularly known as Uncle G, is determined to "change the trajectory." Here's his alternative approach to prevent getting buried in debt when purchasing a home.

He illustrated this by considering a scenario where one spends $1.2 million on a home and keeps it for 10 years. In addition to the substantial total, Cardone pointed out the following fees that would need to be paid over the decade:

• 12%, equivalent to $144,000, in broker fees
• 10%, equivalent to $120,000, in maintenance fees
• 20%, equivalent to $240,000, in property taxes
• 70%, equivalent to $840,000, paid to the bank

These additional costs accumulate to $1,344,000, which, when added to the original home price of $1.2 million, results in a staggering total of $2,544,000.

He says, "A $1.2 million home will have to be sold for $2.5 million in 10 years. You're not going to sell it for that amount just to break even."?

He describes this scenario as "dead money," a term used to describe an investment that exhibits minimal value growth or is locked up for an extended period with little return.

He further explains, "And you had to put $220,000 down to do this deal," referring to a 20% down payment, which was historically required by lenders to purchase a home without mortgage insurance, although many have since relaxed that requirement.

Cardone asserts, "They're serving a master. They'll borrow money from the Bank of America. And then if they can get some more money, they'll have a little retirement account — [and] that funds Wall Street. This is a big game."

According to Cardone, rather than buying a house, you should consider renting where you live and utilize the $220,000 saved for a down payment to invest in real estate that generates passive income. He strongly advocates for residential real estate, which has demonstrated its resilience during recent economic turmoil, unlike other segments of the commercial real estate sector such as offices, hotels, and retail.

Now what is so unabashed about the news source. Instead of stating the truth about investing in real estate, they start plugin REITs as your real estate alternative. This chaps my hide, as they are extending Wall Street's agenda here, and actually shielding people from buying actual real estate. When you are buying REITs you are investing in companies that invest in real estate. It is just paper. It is no different than buying a stock.?

REITs should not be lumped?into real estate investments for these reasons:

Real estate syndications: Tangible assets, while REITs invest in real estate companies.

Syndications: Illiquid investment in actual real estate; REITs: Liquid investments, traded like stocks.

Multifamily syndications: Favorable tax treatment, including deductions for depreciation, interest, and expenses. REITs, no favorable tax treatment. Taxed like stocks.

Multifamily syndications: Value added through renovations, leading to increased cash flow and higher returns. REITs - no cash flow, interior returns.

Ok, I will now get off my soap box.

FROM THE FORTRESS FEDERATION BLOG

Jerry, an orthopedic surgeon seemed to be leading a luxurious life that suggested financial prosperity. With a grand residence, extravagant vacations, and all the symbols of wealth, it appeared as though Jerry had attained affluence.

However, behind the scenes, a different reality unfolded. Despite their substantial income, Jerry was spending every penny as it arrived, without a long-term financial strategy in place. Consequently, they missed out on the opportunity to make wise investments and accumulate wealth.

Meanwhile, Jerry's colleague, Elaine, another surgeon, had paid off her student loans and amassed millions in net worth. How did she achieve this? By strategically investing in real estate along the way. She also lived in a beautiful home and enjoyed wonderful vacations, discovering that she didn't have to sacrifice much while she invested.

In this blog post, we will delve into the reasons why physicians face difficulties in amassing wealth and unveil the power of real estate investment through Elaine's inspiring success story.

Let's address a crucial matter: physicians often encounter significant obstacles on their journey towards wealth accumulation.

Thanks for reading.

See you next month

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