Financial Ideas and Notes
for 2009
What’s in Your
Economic Future?
THREE DECADES OF MARKET UPDATES We all can use some good news. The philosophy of the glass being half empty or half full can certainly set the tone of our outlook and can allow us to either be focused on being in the solution or basking in the problem. The past year was so full of the glass being drained that to spend more time reading another article recapturing the state of the economy would just be redundant. It’s a new year filled with new challenges left over from the previous years and we’re all experiencing the reality of the economy. In the spirit of moving forward and not rehashing what you already know, more charts, more details, more market conditions… yawn; let’s take a very important look at where your money is. Be AWARE of where your money is. Are you considering selling and if so are you planning to do a 1031 exchange? Make sure that you are well aware of where your accommodator (Qualified Intermediary for your Section 1031 Exchange) is investing your exchange proceeds. It is crucial that the exchange funds are fully liquid insured (not securitized) money market accounts. Funds should NEVER be invested in any auction rate securities or any investments with liquidity issues! ASK the questions about how your exchange proceeds are invested. A well known title company (I’m not going to mention a name) invested in auction rate securities and as a consequence portions of their exchange funds are illiquid and they recently terminated operations. Yes, you read this correctly. When they filed their third quarter Form 10-Q filing with the Securities and Exchange Commission (a matter of public record) it disclosed that as recently as October 2008, they held exchange funds in the amount of $101 million in auction rate securities. Furthermore, the report stated that “since mid February 2008, there has not been a normal market for auction rate securities, and the Company has not been able to sell its holdings as it normally would.” For decades, I have pointed out to clients the importance of a Title Company doing their own underwriting; this has always been a major deal point. Make sure you have the following securities if you are doing a 1031 exchange:
I hope this information like all our columns is useful and educational. Over the years we’ve been writing these columns based on our years of expertise with numerous transactions (often with the same apartment buildings), which equates to lots of hands on experience. Now I know that most of you are familiar with us, because Lambert Investments has been doing this for 30 years now! Yes, 30 years– I can’t believe it! When we started we were the little “pishers” (kids) and we were privileged to be amongst such good company; a few very hard working apartment brokerage firms and many seasoned landlords; I could go down memory lane, but that’s probably a column unto itself. Often I contemplate as to what I’m going to write about that I have not already addressed in a previous article. I developed using Yiddish phrases as so many of the apartment owners in Santa Monica speak the language and let’s face it, it’s pretty universal, not to mention that sometimes there are just no words in the English language to define this business. The most important thing about all this experience in good times and in bad, is that it means something if we can pass it on. It’s also nice to hear back from many of you when you ask you for an extra copy of an article or call with a question. It’s also really nice to be acknowledged with the privilege of having your business, I say this not so much for myself but more importantly on behalf of my business and life partner, Carl Lambert. Carl continues to contribute endless time, energy and his expertise in defending your property rights both locally and in Sacramento. We value being a source of information to you and know that it’s a significant contribution to this landlord community. For the past 30 years, we have consistently provided estimated property values based on reality not just telling you what you want to hear to obtain your business and we often lose business because owners are enticed into believing something which is just not true. Inevitably these properties do end up selling just as we had indicated in our original market analysis and we wonder why we had to lose the business; the answer is integrity and continuing to stand by providing you with accurate information. After three decades of apartment brokerage and property management we’ve been through many seasons and markets and remain privileged (yes I said privileged, remember the glass is still half full) to be experiencing a market that none of us has ever seen. Let’s look forward to our future, make decisions knowing that what we do today will affect us tomorrow and know that what goes around eventually comes back around. We thank you for allowing us to serve you for the past 30 years and look forward to continuing our service to you and our community. A very happy healthy New Year to you all.
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