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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (38085)8/8/2005 11:08:41 AM
From: John Vosilla  Read Replies (2) of 110194
 
"I feel I understand that business well enough to tell you that buying "investment properties" for 2-3% cap rates (or vacant) is a nonsensical prescription fo disaster."

Such a simple concept few seem to want to understand or even care about. It really makes the Cisco beats by a penny and skyrockets even with a PE of 100 back in 1998-99 seem sensible since at least Cisco was growing it's top line 35% a year and you could use a 10 year discounted cash flow model to justify the current value. But take a property today at a cap rate of 2%, growing rent at perhaps 3-5% tops with operating expenses growing at 7-10% makes absolutely no sense. Of course the masses are fixated on 20% appreciation, little down and 1% start pay rates to make their quick fortune. What a country...
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