Post: #1

Do any of you invest in real estate? I have been searching
around for ways to make money and I think now is the time to buy a house. Prices are not going to get much lower. One of the most important rules in investing is to buy low and sell high.

http://www.businessweek.com/lifestyle/co...753812.htm

Post: #2

I cannot disagree more. Housing has another 20% downside to come.

Interest rates will rise dramatically within the next few years (they are very artificially low now), and this will crash the market. Only people with a big pile of cash will win.

Another aspect will be sky rocketing property taxes. Most municipalities are insolvent and not far from bankruptcy. They will be jacking up taxes. The uncertainty and risk of tax changes will discourage people from buying and drive prices down further.

Post: #3

I am much more optimistic. Interest rates are low now so people
should get fixed rate mortgages. Governments will cut spending and raise taxes
to balance budgets. As wages and employment rises, so will government income.
Debt is very bad, but we have paid off debts before.

http://www.usgovernmentspending.com/down...14&units=p

http://www.reuters.com/article/idUSN292650320100430

http://www.reuters.com/article/idUSTRE6341EA20100503

http://tpmdc.talkingpointsmemo.com/2010/...-month.php

http://news.yahoo.com/s/ap/20100427/ap_o...us_economy

http://metro.onmilwaukee.com/articles/75...rrett-says

People who say the economy will crash remind me of people who used to say the USSR or Japan would beat the US in the 1980's.

Post: #4

Interest rates are low now. That is the whole. Point they will not be staying low. Either inflation (in the bad case) or increased credit demand from a recovering economy (in the good case) will drive rates up. People will not be able to take out large mortgages to afford current prices and prices will fall.

You are confusing property prices with a bullish/bearish indicator on America. The simple fact is housing has historically just run with inflation (see case-shiller). It has not been a way to achieve capital gains. The last fifteen years were a strange anomaly driven by deliberate government policy. Housing prices are still way over the trend line and there is no good reason not to expect prices to revert to trend, regardless of what happens in the wider economy.

Post: #5

I am no investor or economist, but I know that no one is making any more land. I
also know the population is growing and people need to live somewhere. You're right that
RE is an inflation hedge. RE also offer tax protection AND incomes from rent. Maybe real estate will be bad for 1 or 2 years, but not forever.

http://www.kylandsales.com/blog/%E2%80%9...ark-twain/

http://www.bakervaluation.com/re_investment.html

http://professional.wsj.com/article/SB10...55306.html

Post: #6

Owning real estate outright can in certain circumstances be an inflation hedge. Having a big *mortgage* in an inflationary environment absent substantial wage inflation just means you're fucked. You're just stuck defaulting because you need all your cash flow to buy groceries and gas. People always miss this concept. Really, there is no reason to expect housing inflation, even if the general price index ticks up a lot. Nominal housing prices are more likely to revert to 1993 levels if oil hits $400/barrel.

Land and population growth arguments are ridiculous. I repeat: In 250 years of American history housing has overall not gotten more expensive on a PPI basis. During the most massive population and economic growth period in world history, housing was flat.

Post: #7

"People who say the economy will crash remind me of people who used to say the USSR or Japan would beat the US in the 1980's. "

USSR did beat us in girls.

And Japan did beat us in food.

Post: #8

Real Estate, like every other investment, is a casino. If you believe that you have a high probability edge, then place your bet. Thats what its all about.

But remember, your competitors are smart and experienced. In other words, after taxes, insurance, repairs, management, and the probability of loss are removed from your profit margin, then real estate becomes much less of a high probability gamble than people are led to believe. If it weren't then the smart money would buy up real estate much faster then they do.

I'm not saying that you cant make money with a calculated approach, but that the margins aren't that large, in ratio to risk, in residential real estate.

But if you believe in your edge, then place the bet.

Btw, the media is the last place that you should get your investment information from. Bank influenced media outlets and market 'studies' have a vested interest i n keeping the market optimistic, and therefore the information is unreliable. Make sure that you do your own analysis.

Post: #9

Well, I think people should be careful where they invest. The real estate market as a whole may be overpriced, but I don't think all cities are overvalued.

http://journalrecord.com/2009/07/21/okla...best-list/

http://img89.imageshack.us/img89/9413/gr...onginf.gif

I also believe the media was one of the causes of the recession.

http://www.usnews.com/money/blogs/alpha-...-recession

My main point is that I don't want people in 2020 to complain that they should have bought
real estate when it was cheap in 2010. I also want to suggest real estate as an option to make money.

If anyone has any real estate book suggestions or experiences, please post them.

Post: #10

(05-17-2010 12:08 AM)memphis Wrote:  Well, I think people should be careful where they invest. The real estate market as a whole may be overpriced, but I don't think all cities are overvalued.

http://journalrecord.com/2009/07/21/okla...best-list/

http://img89.imageshack.us/img89/9413/gr...onginf.gif

I also believe the media was one of the causes of the recession.

http://www.usnews.com/money/blogs/alpha-...-recession

My main point is that I don't want people in 2020 to complain that they should have bought
real estate when it was cheap in 2010. I also want to suggest real estate as an option to make money.

If anyone has any real estate book suggestions or experiences, please post them.

Its true that real estate almost always "goes up" in price. However, when your expenses and inflation are calculated in, your gains almost always turn out to be very ordinary, or even sub-ordinary, for the average property. Now, if you are good at sourcing above average property, then you can make some better gains. However, you will be competing with the smart money for these properties, and the price will be driven up accordingly. It follows that some of the best deals are ones that you may pay too much for at first, rather than the properties that you buy at discount. If your investing for cash flow, then focus on multi-family or commercial. You can make decent cash flow in either of these, but its still not for people who don't know what they are doing. Especially commercial.

Your still citing media outlets for your information. These articles are mostly worthless as far as credibility and unbiased accuracy is concerned.

As far as books go, I'd recommend reading as many good books on the stock market as possible, followed by real estate books that deal as much with the technical aspect of investing, rather than strategy. This is because your perspective on both markets (risk, reward, competition, auction theory, etc) should essentially be the same, with much more intelligent material having been written on the stock market than on real estate. Real estate books tend to be heavy on motivation and short on all else. Stock market books will teach you how to think about markets.

Which technical real estate books, that you will read, will depend on how you are trying to invest. I do recommend that you read the best legal level real estate volume that you can find, which you will have to source from your local law library. This will teach you more about documents than anything you can get in the mass market. There should be a state specific volume as well as a broader volume that is more nationally focused. Read both. Buy them both if you are seriously considering becoming an investor, but they will cost several hundred each.

Also, taking the classes necessary to become a real estate agent are a cheap and easy way to give you a huge head start in understanding the legal side of real estate. You don't have to become an agent, just take the classes. When I took it, it lasted about a week. Completely worth it.

Post: #11

Interesting. There are some good points here. However, I am confused why anyone would think WSJ, BusinessWeek, or US News would not be credible or accurate. They are not exactly National Enquirer.

If there is ever a spin to a story, I prefer to hear the optimistic side. We have enough to worry about already and usually the worst never comes true. I do admit that the same newspapers that screamed like Chicken Little that the sky was falling in 2008 now look a little hypocritical when they say good times are here again.

http://freakonomics.blogs.nytimes.com/20...own-fears/

Post: #12

(05-17-2010 02:01 PM)memphis Wrote:  Interesting. There are some good points here. However, I am confused why anyone would think WSJ, BusinessWeek, or US News would not be credible or accurate. They are not exactly National Enquirer.

Well, I would ask you why you believe that they are credible or accurate?
Its much safer to be pessimistic of gambling advice than to be optimistic.

These news sources are all owned or influenced by big money. Big money that makes money from people like you and me. Therefore, taking they're advice is like taking poker advice from the guy playing poker across from you at the table.

(05-17-2010 02:01 PM)memphis Wrote:  If there is ever a spin to a story, I prefer to hear the optimistic side. We have enough to worry about already and usually the worst never comes true.

Man, o, man. Your a dream come true for a lot of people. I have some swampland that I am sure I could write you a very optimistic article on. It may even get you to invest in it, if I'm lucky. Well, at least someone like you will invest in it.

See my point?

edit: after rereading your posts, and your military post, your an obvious shill and a jackass. take it elsewhere.

Post: #13

Memphis,

-Understand the difference between an investor and a speculator.

-Don't look at real estate the way you look at stocks. For stocks all that matters is buy low sell high. Therefore for stocks you have to worry about whether it will appreciate in value and how to time the market. Plan to hold the property for the rest of your life. If you never plan to sell, the "value" of your property does not matter does it? At the end of the day you'll own land + improvements that all of us can agree has inherent value which is important when the shit hits the fan.

-All you should worry about is cash flow. If you decide not to live there, will you at least break even on rental income (remember to account for maintenance and vacancies)? If you can learn to get positive cash flow, then you're really going to do well. Remember, if you have a fixed rate loan and inflation explodes, you're doing even better than before because your rents will go up but your expenses will stay almost the same.

-Don't worry about trying to time the market, hoping for aggregate prices to drop 20% or whatever. The real estate market is inefficient and it's possible to buy properties at 40-50% discounts if you have the time. If you wait, you're taking a lot of risk in terms of prices, interest rates, ability to find financing. It's always a good time to buy real estate.


Good luck and always remember the cash flow.

Post: #14

There are tons of books out there on RE investing, because there are tons of ways to invest. I've read dozens but the only one that you MUST read is Rich Dad, Poor Dad.

By the way, I'm a professional real estate investor.

Post: #15

There are some nearly guaranteed ways to make money in real estate.

When land is rezoned from agricultural to residential/commercial, it dramatically increases in value.

You just have to know when/how this happens.

Pick a Latin American country. Find a secondary city, in the 250,000-750,000 population range.

Have a local partner that you have an established relationship with. This way, you are less likely to get shot/robbed.

In many of these secondary cities, there is still a significant amount of agricultural land close to the city center. In one particular city in Peru, I was shocked at this when I first saw it.

Step one, buy the agricultural land. Note, you are not harming the farmers, as people try and steal their land without even paying them anything.

Step two, make a donation to the mayor and a couple of the city council. Land gets rezoned.

Step three, contract with a partner/partners from the capital city to develop the land for residential or commercial use.

You can either take your gains and leave, take an interest in the development, or some mix of the two.

Lastly, since you paid peanuts for the land to begin with, your exposure is low.

Post: #16

"Step two, make a donation to the mayor and a couple of the city council. Land gets rezoned."

This is an interesting thought. Does anyone have experience donating to public officials and getting some kind of ROI? In the USA.

Post: #17

With the recent downgrade of Spain from AAA by Fitch, I realized this country can and could even be cheaper than Greece.

Quote:Nearly 800,000 homes were built in 2007, more than in Britain, Germany, and Italy combined. There is now an overhang of 1.6m unsold properties, six times the level per capita in the US.

http://www.telegraph.co.uk/finance/comme...risis.html

Hard to believe? Heres a capture from the 2008 documentary "Let's make money" showing huge complete cities of brand new houses built to be simply left inhabited.
http://i47.tinypic.com/bbuc2.jpg

With all those options I just don't get how someone with the proper amount of money would want to get something in USA...

Post: #18

(05-16-2010 08:35 AM)memphis Wrote:  Do any of you invest in real estate? I have been searching
around for ways to make money and I think now is the time to buy a house. Prices are not going to get much lower. One of the most important rules in investing is to buy low and sell high.

http://www.businessweek.com/lifestyle/co...753812.htm

Detroit is still falling in price, it happens when people leave the city in droves, also the annual land tax rate/amount is insane, and the crime rate does not help either.

They have a massive oversupply of houses and Mayor Bing is pulling these now crack houses down, and turning back into farmland.

If you can hack all that, you could live cheaply in Detroit

What a sad end to a icon city, the MotorCity, some scum even call it Detoilet

"Lifes about, shooting your load"