What do you invest in when everything is over valued?
Investor · Roseburg, OR · Member since 2015 · 34 posts · 48 votes
What do you invest in when everything is over valued?
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Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
8yFor every overpriced highly speculative Phase 2 selling stage area in America, there are areas of America that are moving from stage 1 to Stage 2 buying phase. This is the phase where you can make great cash flow and Appreciation is just starting to take off. I invest in Euclid Ohio and Lake County Ohio presently and property values have risen about 40-50% since 2014 in those areas.
I sold and 1031 exchanged all my pricey San Diego Rental properties that are clearly In the middle of a Phase 2 selling stage. In a few years the party will be over in San Diego. The party is just starting where I am investing now.
I went from 10 San Diego rental properties purchased in a clearly stage 1 Buying phase in 2011 and 2012. I was cash flowing $50,000 a year. Then, in late 2015-2016 all of those San Diego rental properties doubled in value. So, I 1031 exchanged them all and now am a principal in 8 apartment complexes in NE Ohio that have 122 front doors and they cash flow at $160,000 a year and rising at a rapid rate.
You gotta know when to hold em, know when to fold em, know when to walk away and no when to run!!
If I can do this on $80,000 family W2 earned income living in pricey San Diego, anyone can.
Go for it!!!!
Swanny
82 Replies
- Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes8y
Hello Gordon! That is a good question and you chose the right place to ask it. Based on my experience and age I would tend to say your question is apartment investing for a long term investment and buy one that gives you a positive cash flow from day 1. People will always need to have a place to live and apartments are less or temporary for most Tenants. Screening is very important on top of good maintenance and customer service. Do not count on anything will happen that has to do with the future. Always evaluate based on the worst case scenario. The experience needed saying about apartments is a myth and apartments can take empty units much better. It's value will increase more for every dollar spent because of the cap rate. Even though I am not speaking based on my investment experience, I have about 30 years of construction and real estate brokerage licensure in Texas. I hope this helped you. Good luck to you!
- Brooklyn, NY · Member since 2016 · 316 posts · 130 votes8y
Originally posted by @Gordon Forbes:
What do you invest in when all the cyclical investments seem to peak at once?
In my humble opinion:
Real estate is due for a correction.
The stock market is due for a big correction.
Every currency is on shaky ground.
Precious metals no longer seem to be the contrarian investment.
Crypotocurrencies are just too new to know which ones will have a future.
Inflation or hyperinflation is a real possibility so sitting in cash is suicide.
If everything goes really really bad then the only universal form of "monetary" exchange will be canned food and shotgun shells. I'm not enough of a doomsday prepper to go that far.
So what does that leave?
Does one diversify so that when 9 out 10 investments tank one has enough left over to buy Scotch and wallow in drunken misery? (Ok, perhaps that's a little too pessimistic).
It's just when I look at my portfolio I think "man, I should sell that (real estate, stocks, forex, metals) before it drops like a rock" and then do what with the money?
If you believe hyperinflation/inflation is real possibility find those sectors that will do well in that environment. Next, every real estate market is not the same. What markets are poised to grow no matter what. Population growth is still destiny.
- Rental Property Investor · Boise/Portland · Member since 2017 · 709 posts · 742 votes8y
I'm diversified between stocks, bonds, real estate, healthcare industry, and a little crypto (specifically blockchain). I also took a leap into a new venture and got a great return investing in a banana plantation where I live in the Philippines as an American expat. Contracted buyer bought everything I could grow at a set price regardless how the market was doing. It was win-win for me.
- 8yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by @Matthew McNeil:
I'm diversified between stocks, bonds, real estate, healthcare industry, and a little crypto (specifically blockchain). I also took a leap into a new venture and got a great return investing in a banana plantation where I live in the Philippines as an American expat. Contracted buyer bought everything I could grow at a set price regardless how the market was doing. It was win-win for me.
I'm a big fan of Blockchain myself
Had a decent mineral fund investment in an oil deal go well recently
There are always deals to be had, you just to know the right people and they will present "the right" opportunities
Much success
- Investor · New York, NY · Member since 2017 · 263 posts · 118 votes6y
@Gordon Forbes If asset prices, broadly speaking, are high, portfolio allocation partly shifts towards safe haven ones like gold, maybe in the near future electronic gold etc. To state that those no longer provide protection, need to be able to prove that their negative correlation in crisis times has disappeared (which doesn't seem to be the case now in 2020)
The stock market, absent tech, is not necessarily 'high', but either way you need to have precise valuation metrics to work with: P/E ratios, Tobin's Q, Price/Revenue, Hussman Margin-adjusted CAPE, whichever one correlates best to subsequent price changes. Now tech is hard to 'value', but still need to build a model for that to be able to make any claim.
Real estate outside the U.S. is overvalued in certain countries and regions: Canada, Scandinavia, Oceania, UK some prominent examples according to a study by economist Niraj Shah quoted on VisualCapitalist.
Real estate in the U.S. is overvalued in certain states and counties. Based on valuations I computed as of Q1 2020 using historical price-income relationship Idaho, DC, Nevada, Colorado, Arizona, Florida, Texas and Washington are overvalued >10%. The rest states are either undervalued or fairly valued, though specific counties in them may be overvalued.
Can PM me for any data, further info.
- Investor · New York, NY · Member since 2017 · 263 posts · 118 votes6y
For anyone interested, a video of my presented lecture/study mentioned above is below:
US Real Estate Valuations and Outlook Post 2020 Recession, lecture by Stefan Tsvetkov
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