Inflation can make you money in the American economy. But the first step is often knowing how to select the right investment. Timing, location selection, selection of right kind of property -- these are key decisions.
Twenty-five years ago, Glen Veretto shared an idea with a few friends around a coffee table. The idea grew among five, 10, 20, and zoomed up to encompass more than 200 people. "What if we all share what we might like to exchange or trade?" The idea had merit and became something not only with business benefits but also tax benefits.
So the New Mexico Council of Exchangors came about and has been a huge success. Some people call it "equity marketing," others just call it "property exchanges," and so if one person has, say, an apartment complex or a retail building, and another has a mini-storage building and a cabin atop a beautiful mountain, they come to an "exchange" agreement.
I can tell you about a recent meeting and how impressed I was. There were about 47 people in the room sitting in a large circle, a projector showed the property and locations being discussed.
The moderator stood up and said, "Ok, now we are going to talk about cash exchanges for property."
He went around the room asking each individual: "How much cash are you willing to exchange for property today?"
One man said, "I have $30,000." The next man said, "I have $75,000." The next man, "I have $1,200,000." When they had completed the circle of 47 people, there was more than $30,000,000 in cash around that room ready to invest in something.
Next, each of the men showed or described the property they had, and this was enhanced by the projected photos and financials up on the screen. Then one by one, people would give their codes to indicate an investment interest or trade that came up.
These men were intelligent, successful business people, and many didn't need a calculator to figure the risk and rates of return on each investment.
The meeting proved to me that there is a good deal of money in Albuquerque. There also people in the room from Colorado, Arizona, Nevada and California.
One man wanted to liquidate his commercial building and move to another state to be with his grandchildren. He was interested in trading his building for a nice mountain-top resort in a town near his grandkids.
One man wanted to exchange a large tract of land with some buildings on it for a mini-storage park. On and on it went like that.
Glen Veretto told me, "We seek out people who are of good reputation, successful and who have the ability to make deals."
It was an exciting and fun weekend, two days to deal making and trading, and I found it entertaining and educational, and it gave me many investment ideas.
Glen Veretto, who owns Rocky Enterprises, Inc., a real estate company, said, "In some cases we have seen people make some superb investments, and in this environment we have more confidence that the people are legitimate players." Glen, who has lived in Albuquerque for many years, said, "We see cycles, ups and downs, but in the long run, we believe that real estate is still the best investment hedge against inflation. Also, an income-producing property will not only pay for itself while you own it, it will appreciate in value if it is in a good location and well maintained."
When we asked him: "What if an actor or film producer hits it big on a film and they have money to invest, what would you suggest that they invest it in?" he replied,
"I believe the stock market has too much risk, and bank CDs paying 1-2 percent are not very attractive. I'd suggest an investment in something that generates some income, takes little on site management, such as mini storage parks, and is in a location where the land will go up in value. Always think of these investments as long-term investments," Glen Veretto said.
Sounds like good advice, because I recall as a youth, just out of college, buying and fixing up old junker houses and renting them out. Over the years, my first million came from those "sweat equity" real estate investments.