Where to Invest these days?
Originally posted by @Mark Vejnar:
San Jose seems like a brilliant market - if a bit bullish.
Ben Graham's book - "The Intelligent Investor" - advocates buying with a margin of safety. His students do this all over the world in bull and bear markets.
How can real estate investors do this in hot markets like CA, HI, etc?
Just like Ben Graham's students, CA and HI investors are killing it in both hot and cold markets. When investors can obtain financing between 1.75% - 3% interest rate, buying at 3%-4% cap rate and taking it to 5.5%-6%+ cap rate in a short amount of time gives plenty of margin for safety.
Of course, 99%+ of investors don't know how or couldn't obtain these kinds of financing. So they are left wondering how CA and HI investors are doing it. It's a beautiful world once you have cracked the code. Otherwise, it's quite scary from outside looking in and keeping on wondering and wondering and wondering how CA and HI investors are making millions. I guess it must be the appreciation, which is considered speculative and gambling regardless of what history has shown. Only cash flow is real. :0)
Excellent point @Account Closed ! Small spreads on large sums of dollars (e.g., 2% increase in cap on 500k property) can be spectacular. The margin of safety is obtained by finding great deals at below current market values with room to force easy appreciation. It's hard not to win and generally speaking very difficult to actually lose money in this situation if you know what you're doing. I'm still a newbie real estate investor so the little things "I don't know I don't know" might break me in a market like CA, but for the experienced investor who is an expert that same market, opportunities will always exist. Happy investing. This thread is awesome!
I know Scot's answer, but what do you other investors think about syndication for large redevelopments in the Detroit (vacant land already bulldozed and some still needing bulldozed)? Yes the bad lands that are not bad anymore because no one is there.
I think the best idea is to diversity. How about real estate investment trusts REITS)?
- Archer Investors
- 650-430-4333
- http://www.ArcherInvestors.com
darn spellcheck. Diversify
- Archer Investors
- 650-430-4333
- http://www.ArcherInvestors.com
My partner asked me to post her view of Detroit, I think it serves as a great recommendation letter. She was a nay-sayer for awhile, but she is starting to see it now. Americans buy what is American because many of the foreign investors have the same vision as I do. Luckily most of them can not do large developments by themselves, we are!
I want to post this please read
I am going to reply to this post only positively and Chris yes as your partner I do see the bigger side of Detroit . See I used to live in Detroit when I was younger when Motor City was just that a place where everyone had jobs and could live. I am not knocking anyone here for how they feel on Detroit hell I have said the same thing. But the vision is there and the properties are there. We are the ones that have to make the change to make it better for all and not look at it as the hood or the people who do come along and destroy property.
But I call that poor management most landlords look at it for the rents oh I got money coming in but are quick to point a finger. First off before you let anyone move into your property do a background check know who you are dealing with and always rent to the older crowds or couples who have responsibility. The riff raff has destroyed Detroit but now it is time to put it back together and we believe it can happen so for the negative existence in the air try doing something positive make a change build a community for those that want to live in Detroit give them the opportunity. Real Estate in Detroit can be a great come up for those that believe and ummm yes my partner did take that property in detroit I didn't believe it until I seen the price as well so next year I will be investing right along with him in putting detroit back on the map. Let's keep moving. My mom always said never let right hand know what your left hand is doing...
@joey
@Account Closed there are a ton of cash flowing markets out there and I'd say that in every mkt someone is cash flowing. I think it's more about the current and projected long-term fundamentals of the market and the team you have in place. Granted, some markets are easier to find cash flowing properties (i.e. Cincy) than others (i.e. NYC) but I'd start with the market fundamentals then move on from there.
