Sage Advice From An Ex-Landlord
When I was about to start buying property some years ago I met a guy through a friend-of-a-friend who is an ex-landlord and is currently an attorney based in West Palm Beach, Florida. This guy used to own about 25 single-family units in Oklahoma City, OK back in the mid 1970s.
Apparently the reason he started buying all these properties was that back in 1973 our “good friends” at OPEC decided to basically stop supplying oil to the United States and other countries who supported Israel during the Yom Kippur War
Apparently, the ensuing oil crisis caused the United States and other western countries to seek other oil supplies as a way to blunt the effects of another potential shock to oil prices. This included drilling domestically which made Oklahoma City a good place to be at the time.
A huge influx of people descended on Oklahoma City looking for well paying yet unskilled jobs in the oil industry. From what this guy said, there was such a shortage of housing that people were living in tents just to be close-by to these jobs.
As a result, the landlord business was the business to be in at that time. After 1980, oil prices declined for 6 years due to a glut of oil on the world market. Over-production and weakening demand were the main reasons for this situation.
According to this guy, around this time people began leaving in droves from the oil industry, including Oklahoma City, thereby devastating the housing market there. From this guy’s account, you couldn’t give a house away to save your life. Sound familiar?
His advice and my takeaway was that:
- Most times, it doesn’t matter how smart you are and how hard you work, a lot of people’s success comes from luck and being in the right place at the right time.
- Real estate is not the most liquid of assets in hard times.
- Big booms (real estate, oil, gold, technology) don’t usually last
- Keep your chin up. Things will tun around.
Personally, I like what Warren Buffett says, “Be nervous when others are greedy and greedy when others are nervous.”
