Balancing acts
Satisfying all the needs and wants involved with home ownership requires planning
By Joanna Dehn Beresford 05/20/2010
As a matter of disclosure, Jon Lam, principal and chief executive officer of Newbury Capital Management in Pasadena, wants us to know that he is an investment adviser without any ties to the real estate industry. In the spirit of transparency, I confess that I am also no expert in the real estate business, in spite of my voracious interest in the topic. And I am definitely not an expert in the realm of capital management. As one of my older brothers often reminds me, “Joanna, you couldn’t finance a pack of gum.”
But don’t stop reading. I promise you will find something worthwhile in this story, because I am somewhat of an expert at finding experts.
Jon Lam has managed hundreds of millions of dollars of personal assets for his clients over the course of his career and knows a lot about spending, saving, earning and planning for the future. One of his goals when conferring with clients is to help them identify their needs and wants. Inevitably, for the standard client, shelter appears at the top of almost any list of priorities — regardless of market and economic trends.
“Real estate has traditionally been thought of as a long-term process,” explains Lam. “In the last 10 years, short-term real estate interactions have risen. People consider a house as an asset to ‘flip,’ for example. But our purpose is to help people plan for the second half of their lives. The biggest line item under expenses is housing cost. If you don’t ultimately own shelter, you’re at the mercy of a costly, never-ending monthly expense.”
My other resource, an investment and real estate authority who operates throughout Southern California, wishes to remain anonymous. Could be the IRS, FBI, witness protection, professional discretion or — and this I doubt — simple humility. But for want of a real name, I usually refer to him simply as my Guru. He encourages residential real estate investment for both short- and long-term gain, and he says to do it now.
“If you don’t buy a house this year and you can fog a mirror,” as Guru delicately puts it, “you’re a f*#@ing idiot.”
According to Guru, the real estate market topped out in the last quarters of 2005 and has experienced a steady decline ever since. Values and consumer confidence remain pretty low (depending upon region) and, in Guru’s opinion, taxes by the federal government haven’t improved the situation much. Out of the mouth of the Guru: “There are still, and will always be, buying benefits, even for the infinite moron.”
Guru and Lam agree that, in addition to income and some cash for a down payment, pre-approval is indispensable. “First lesson,” says Guru, “you can’t steal in slow motion. So go get your pre-approval for a loan before you start shopping.”
What about that down payment? Lam expresses mild surprise over the low net worth of a huge percentage of Americans across socioeconomic definitions. Particularly in Southern California, “it’s easy to get caught up in the trap of living beyond our means. We’re bombarded with images that tempt us to keep up with the Joneses.”
“Ha! You mean keep up with the Kardashians!” Guru tells me later.
In any case, when it comes to saving money, owning a home, taking advice, evaluating the essential and the ethereal requisites of a life, it’s all about balance. It’s an important word in Lam’s vocabulary.
“We are not dictators,” he says of himself and his staff. “Our job is to ask clients: How do you want to live? And we try to keep focused on a long-term perspective. Then we make suggestions about the choices clients can make to live that life. Sometimes it’s sobering, but sometimes they learn that they can live a less Spartan lifestyle in the present. The important thing is to start prioritizing.”
Or, as the Guru succinctly states, “If you have any desire to own a home ever, and I don’t care who you are or where you live, if you’re not doing everything you can to secure your credit, your down payment, work with the best broker, then you’re a f@#*ing idiot. NOW is the time to rip a deal.”
Contact Joanna Dehn Beresford at truewrite@yahoo.com.
DIGG | del.icio.us | REDDIT