During a bear market, one of the things I like to do is embrace losing. The more you can embrace reality, the more you can accept reality. And the more you can accept reality, the easier you can move on with your life.

Recently, I ended up losing ~$1 million in real estate. It was a significant hit to my net worth. Years of gains, savings, and hard work vanished into thin air! How sad.

Thankfully, as a fake retiree focused on cash flow, the $1 million real estate loss didn’t negatively affect my rental income. If I can just keep the cash flow coming for the next 18-24 months, fingers crossed everything will be OK.

Let me share a situation about how losing so much money in real estate might actually be a net positive.

As someone who has been consistently invested in private real estate deals since late 2016, I’m now firmly in the window for receiving distributions. My investment thesis to invest in heartland real estate has turned out well, partially thanks to the bad luck of the pandemic.

Although a couple of my investments in one fund turned sour due to a lack of equity cushion, poor execution, and the shutdown of commercial offices, the vast majority of investments have provided positive returns.

One such investment was a multifamily investment that paid out $122,423.04 in distributions on July 6, 2022. The invested capital should be about $60,000 for a ~15.3% compound annual return over five years. I say should be because it is part of a fund that invested in over 10 properties.

If you want to upgrade your home, get excited! The perfect time to upgrade to your move-up home is coming. Meanwhile, be patient and build your cash reserves.

I really can’t believe the good fortune for move-up homebuyers. The supply of homes has stayed relatively steady (and still well below pre-pandemic levels), but the demand for homes has been dropping since the end of 1Q 2022 given mortgage rates have increased by ~2%.

For those of you with strong cash flow and large cash balances, you should appreciate this economic environment. Not only is the Fed helping you make nicer homes more affordable, you’re also getting a higher return on your risk-free cash.

One of the reasons why I will never remodel again is because I hate dealing with contractors and building inspectors. It is an unfair playing field because they hold more power even though the homeowner is the one with the funds.

Please spend time remodeling while you’re in your 20s and 30s for economic returns. Once you’re in your 40s, unless you’re a masochist, you won’t want to remodel anymore.

The main way contractors hold homeowners hostage is by getting you to sign an attractive bid. Once the contractor collects your deposit or starts the work, you are at the mercy of the contractor’s timeline and business practices.

If a contractor finds a more lucrative job, he will likely delay yours indefinitely. If a contractor wants to charge more for some work, he probably can up to a certain extent. In the scenario where you have a great contractor, hold onto them for dear life!

Switching costs are extremely high, which is why savvy contractors can get away with charging more and taking a longer time to complete the project. They can always blame something for the delay or the extra charge and you will have a hard time doing anything about it.

In this latest episode, let me share with you how my remodeling contractor tried to hold me hostage to extract more money. It is a new strategy I hadn’t experienced before.

By sharing this story, it will wisen you up so you can save money and have a better remodeling experience. Further, I hope this story also propels you to invest in real estate more passively to protect your sanity.

One of the things I’m curious about is how real estate crowdfunding platforms add value for their investors after acquisition. Therefore, I asked RealtyMogul to share an in-depth look at one of their successful value-add multifamily real estate deal from start to finish.

When I was a young man, I would enthusiastically spend a lot of time expanding and remodeling properties to add more value. Now, as a middle-aged man with two young children, I simply don’t have the time or the desire any more. I’d much rather pay someone to add value for me.

Let’s take a look at RealtyMogul’s case study to get a better idea of what they do for investors.