If we were to go back in time one year and sit and reflect on the upcoming year of 2008 would it have been possible to believe all of the financial events that have unfolded? To think that last year we were just creating Coastal Dreams Worldwide. We secured our first 12 acre property and we were raising funds to purchase our 200 acre Las Ladaras parcel. We traveled to Nicaragua in January to scout property and build a design team to begin our visioning of our projects.
Well we all know what happen next... I like how Warren Buffett has summed it up: "You don't know who is naked until the tide washes out." I personally found the market fluctuations very interesting and quite fascinating. I have enjoyed learning about the macro economic process that have lead to the collapse of the monetary systems of the world. This has definitely been the year where there was no where to hide, unless the business had positive cashflow and little to no debt. It looks like 2009 will be another year of exposure. I believe it is time to get back to basics:
Cashflow. Leverage works best when the operations can pay for the financial expense. When cashflow does not cover the interest expense the cards may come tumbling down.
For example, Kevin and I both have real estate holdings in our home state of Idaho. We have not experienced any detrimental effects of the declining real estate market because our inventory has positive cashflow and increasing rents. We have not worried about the real estate market fluctuations.
Similarly, our Nicaraguan operations are paid for. We have not borrowed money. We do not have banks calling our notes due. We do not have interest payments to pay. We raised enough money to sustain overhead on the property for many years. We can still pay our property taxes, security costs and other expenses without borrowing money. We have canceled our trips in 1st quarter and probably 2nd quarter of 2009 to spare expenses. We can wait few years for the markets to change and then we will prepare to capture market share.
Until then we will continue to monitor markets, vision development opportunities, learn about tourism demographics and trends. We stand in shallow water with our suits on.
I believe it to be a bit ironic that I feel more secure in "land banking in Central America" than cash banking in the USA. We wish you all a prosperous and fruitful 2009.
Dear Reader,
