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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

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To: TobagoJack who wrote (94734)	9/20/2012 3:21:42 PM
From: Riskmgmt	2 Recommendations Read Replies (3) of 218916

Real Estate as an investment my take. While I have a great respect for Ramsey Su and some other notable people who have expressed a dim view of this asset class I feel compelled to add a few comments of my own to the contrary. Firstly, we must realize that Real Estate is a broad term, so I am going to be more specific and restrict my comments to single family residences (houses) Secondly the USA has 50 States and 3.74 square miles with such diversity that it renders the macro view mostly useless to the local market investor. For example a house in Detroit may sell for a few hundred dollars whereas one in Manhattan, Hawaii or San Francisco may sell for sixty million. Real Estate is always local and so I am going to address my local market SE Florida and as Ramsey says "why bother" I will list why investors here do bother. Our local market of SFH's had a lot of easy financing driving prices to unsustainable levels during the boom and was targeted for refinancing constantly leaving the majority of HO underwater when the bust came. Prices have dropped some 70% in some areas. This is finally coming to the attention of some international players such as Mark Faber He mentions distressed assets and the southern USA towards the end of this. Mark Faber bloomberg.com also recently there has been stories of Private investors and Hedge funds coming in to this area, such as Pacifica buying 699 homes from Fannie Mae. costar.com Rental returns never so high. Prices have dropped but rents have gone up some 20% in the last 18 months alone. A 10% net income return is available today in this area, some investors have returns of 15 to 18%. All this in an world of 2% CDs Tax advantages are too numerous to list and of course Florida has no State tax. QE3 has made inflation all but a certainty so Real Estate is going to be sort after again as an inflation hedge and banks will be lending again sooner or later now they have an outlet for the toxic stuff on their books. Lastly, my favorite is CONTROL. Remember Enron, M.F. Global, etc. By no means a complete list, certainly not as professionally written as some I have read but then I am not trying to win any popularity contest. Lastly I leave you with this. Jim Rogers says he try's to buy things that are cheap, Marc Faber says he looks for undervalued assets. Luxury Residential Prices Hong Kong $2,783 sq ft Singapore $2,159 sq ft Beijing $899 sq ft Source CBRE In my local market some former Luxury residences in very good areas sold for as little as $100 a sq ft. And for those of you who aren't interested in being a Landlord at any price you might consider financing some of the guys that do. 8-10% per annum returns on 50% loan to value.

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