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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (34975)	6/29/2005 11:25:02 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

Leveraged real estate usually allows you to make 20-50% IRR over time and it doesn't take a special skill or talent and almost everyone succeeds. i have some doubts about this. i don't doubt that you or others may have achieved this in the past, but these kinds of returns are imo indicative of special circumstances (such as the greatest bond rally in history, since 1981, and the great easing of credit terms over the past decade and even five years) and are unlikely to stand the test of time. if they are there for the taking, then "capitalism is dead". what i mean by that is, capital seeks out excess returns available in any sector, and capital is thrown at that sector until the returns no longer exceed. if 20-50% IRR with low leverage were a persistent phenomenon, then that means capital does not seek out higher returns, so "capitalism is dead". can you give an example of an investment where these returns are achieved? what are your assumptions regarding leverage, cash flow, GRMs, etc? also, how far away are we today from conditions which meet those assumptions?