Devaluation, Silver, and Real Estate

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Devaluation, Silver, and Real Estate

Jay Orlauski
Realtor · Fresno, CA · Member since 2013 · 471 posts · 225 votes

so theres been a lot of talk about the devaluating dollar , china pulling out of the us bond market and a whole array of fear inducing headlines slipped in just below justin beiber and bristal palin updates.

There is a lot of talk that the real estate market will stay down for another two years, meanwhile silver and gold are supposed to skyrocket as the feds fiat money starts get exposed for what is it - a house of cards.

I was wondering if anyone is buying silver or gold and if anyone thinks real estate being down is good thing ( a chance to accumulate income producing properties)

It's getting harder to determine where to put assets for growth and safekeeping as it seems things change so fast now days - it's tough trying to figure out which investments will stay relevant. Ask some people and they will tell you to invest in seeds, ammo, and silver - but is it realistic to expect those investments will actually pay off? ( well, silver probably will)

when I was a kid , I thought everybody was going to head to the hills and become survivalists cause the atomic bombs were gonna get everybody and the world was going to be total anarchy everyman for himself.... now it is terrorists/bankers/NWO or whatever other unseen enemy is scaring off / rigging all the investment vehicles.

Guess I'm just wondering what else some of you are hedging your investments with other than real estate....

jay

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Mark N.A
Real Estate Investor · North Carolina · Member since 2008 · 1k+ posts · 483 votes
15y

The best thing you can do, Jayme, is to become 'educated', or even better become an 'expert' in whatever investments you are interested in.

There's plenty of money to be made out there, but not by people with mere 'general' knowledge or who depend upon other people's 'guidance'.

This I have learned the hard way.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    15y

    Moved to off topic forum since this is a broader question than just RE.

    Gold seem like its already had a huge runup, but then I though the same thing when it was $700 an oz. I'm not quite there with the seeds and ammo but that scenario is not out of the realm of possibility. Cash used to seem safe as far as not losing, but even that looks shaky.

    2Reply
  • Mark N.A
    Real Estate Investor · North Carolina · Member since 2008 · 1k+ posts · 483 votes
    15y

    The best thing you can do, Jayme, is to become 'educated', or even better become an 'expert' in whatever investments you are interested in.

    There's plenty of money to be made out there, but not by people with mere 'general' knowledge or who depend upon other people's 'guidance'.

    This I have learned the hard way.

    4Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    Jayme--the seeds, ammo expenditure is more of an insurance, than an investment IMO. Those are things you HOPE don't "pay off," just like having a food/water storage.

    I have accumulated precious metals irregularly for years. Lately I've been selling options on equities & commodities. Not for everyone, but seems to be going well for me. :)

    Jon--Cash? Who's cash? US? Swiss? Chinese? I'm betting on the yuan!

    1Reply
  • Timothy W.
    Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
    15y

    Jayme,
    The easy financing that was once real estate has moved to higher education. That's one "hedge" I'm investing in, but very pragmatically.

    I'm working on a precious metals thing but not as a holder, as a flipper.

    Tim

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    15y

    Since I'm a US citizen living in the US when I say cash I mean dollars. You make a good point, Kevin, that it could mean buying some other currency. Do you seriously mean you're converting dollars in to yuan? And then what? Leaving them in a (Chinese?) bank?

    0Reply
  • Jeffrey K.
    Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
    15y

    Jon I think he means he trades currency.

    0Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    Jon-- there are banks that will allow you to choose the currency of your holdings, for example. If you prefer to hold "cash" in whatever denomination in a safety deposit box, home safe, in a Mason jar buried in the backyard or under your mattress...several companies will sell you currency from a number of countries.

    0Reply
  • Vikram C.
    Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes
    15y

    China has been struggling with a lot of "hot money" that has been invested in the renminbi in the expectation of an appreciation. The Chinese government is loathe to allow the speculators to profit, but the longer it holds out, the more the appreciation eventually will have to be.

    0Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    If you were referring to me, Jeffrey, actually I wasn't talking about trading currencies, although I did that heavily last year.

    Also, airports & some hotels can swap your money back and forth, but usually not at the best rates.

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    15y

    I thought you were referring to holding "cash" in a currency of your choice rather than currency trading. Those two choices seem like "investing" vs. "trading". That is, holding a certain asset, like yuan, on the assumption its value will rise. As opposed to trading short term fluctuations. Since its pretty hard to buy groceries or anything else here in the US with anything other than dollars, our reference point, for better or worse has to be the dollar.

    I certainly wouldn't want to be buying and selling physical bills. The transaction fees anywhere here in the US or Europe are as bad as real estate transaction fees.

    There is another similar investment, though I'm not sure I understand it very well. Carry trade. That is, borrowing money in a currency that has low interest rates, converting it to some other currency that has higher interest rates and buying something, like government bonds, that have a higher interest rate. Previously a popular strategy for Japanese house wifes who could borrow yen cheaply and then buy dollar denominated debt at a higher rate of return. I gather something like that is happening in a number of countries, causing their currency to strengthen above where their governments want. Is there an opportunity for that sort of investment?

    0Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    Jon-- I don't really know about carry trades, but I did collect a bit of interest rate premiums from the spread between currency pairs when I was currency trading. But that can change faster than you want it to. lol

    0Reply
  • Bienes Raices
    Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
    15y

    I would think real estate would be good in this scenario--a "hard asset" (is that the correct term?) like precious metals, commodities.

    0Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    That's a very broad generality. I would say it depends on what type of real estate, which condition its in, where its at and terms that you acquired it at. IMO

    0Reply
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    15y

    I for one see RE as a good opportunity and will continue to invest most of money there. I do speculate on gold, silver, investment grade gems and jewelry.

    I also look at long term equipment lease contracts. Primarily infrastructure related. Rail cars, port cranes, etc.

    There is a lot of ways to lose money in real estate, but knowledgeable investors will make money in RE.

    1Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    Well said, Charles, as always! :)

    0Reply
  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    @Jayme:

    Buying real estate is always profitable if you know what to look for. If you are a pessimist with respect to holding dollars having a lot of debt a great hedge against inflation. This is easy to do with real estate and thus is a good strategy if this scenario unfolds.

    I think many precious metals are overbought right now. This is suboptimal when it is compared with buying real estate with debt IMO.

    0Reply
  • Jay Orlauski
    OP
    Realtor · Fresno, CA · Member since 2013 · 471 posts · 225 votes
    15y

    wow, thank you everybody for your thought provoking responses. I plan to stay with real estate and learn as much about it as possible. So far I have only bought properties for rental income , and did one flip, but would love to learn more about other aspects of real estate - I'm a little interested in notes.

    as far as precious metals, we have collected silver coins over the years mostly as collectables, but now they seem to 'pulling their weight' so to speak - very glad we got them when we did.

    @jon - as always your responses are tempered with levity and logic. Whenever a question is asked by anyone , it's your response I look for first and usually am not disappointed.

    0Reply
  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    I've posted same thoughts many times before.
    1. F&C real estate
    2. Highly leveraged RE in different entity
    3. Food storage and tradeable commodities
    4. Gold in 1/10 and 1/5 ounce am. eagles
    5. Junk silver
    6. Real cash- minimum 6 mos in expenses
    If anyone believes that real estate is ALWAYS profitable, they haven't been in the real world very long. Just ask those that bought at 20% under market, and then watched market go down another 20% in current market. In short term, RE can always cause a loss. If you hold LONG enough, it will always be profitable. Rich

    1Reply
  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    15y

    Fair enough Rich...you didn't take the whole sentence though. IF you know what to look for.

    Having a balanced portfolio of assets is always a good idea IMO. Some precious metals are okay, but I think they are overbought right now.

    My father-in-law buys and sells ancient roman coins and he has made a killing on them in the last few years. He knows how to pick up great values there like members of the board do with real estate. Any asset can be a great buy if you are an expert at it and get a good discount to fair market value. That is the point I was trying to make.

    0Reply
  • Jimmy H.
    Lexington, KY · Member since 2010 · 315 posts · 133 votes
    15y

    Silver market apparently has been severely manipulated over the past few decades (even a pending suit against some JPMorganer's for this - don't have alink on hand) and apparently there is ashort squeeze in silver.

    I think gold and silver will continue to go up. I think holdings in currencies of commodity based economies will prosper long term.

    that being said, I think RE poses some of the greatest opportunities. Buy when others are fearful and sell when everyone is excited is the general premise. therefore I am avoiding commodities at the moment and focusing on RE. Let the talking heads drive down investments prices in RE and let the dumb money chase the silver miners, etc.

    And as was previously mentioned in this thread - the truth is that you will be most successful doing what you know. A bit of diversity should be required, but if you are knowledgeable and successful in one RE niche (or any market or niche for that matter) I say stay there and milk it for all its worth. Do what you know best.

    Turn off your TV and computer and you might have an easier time spotting opportunities without tlking heads swaying your judgement. Or if you have to have the TV on, do the exact opposite of what the talking heads are advising.

    1Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    I don't want anyone to think I or my post was anti-real estate, by any means. Otherwise, I wouldn't be working with a private equity fund that invests in real estate.

    People just need to remember that you can lose money in real estate in "good" times or "bad."

    Is this a good time to be in real estate? Of course it is--if you know what you are doing & what to look for. ANY time is good to be in real estate if you are knowledgeable.

    Like the markets....people often ask me if now is a good time to be in stocks or commodities. I make money if the market goes up, down or sideways, so for me, ANY time is a good time to be in the markets. It comes down to knowledge and strategies.

    1Reply
  • Vikram C.
    Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes
    15y

    FMCG stocks are an option if you are concerned about runaway inflation.

    0Reply
  • Shawn Parsh
    Real Estate Investor · TN · Member since 2010 · 294 posts · 160 votes
    15y

    Great topic. Of course everyone has their own view on the current economy and what is in our future, but I don't believe we have seen the bottom of the real estate market yet. It is my opinion that the dollar is going to tank, inflation is going to shoot up, and unemployment will easily hit double digits. If your purpose for holding real estate is appreciation I think you would be better off to sell now. You can then re-enter the market when we hit the bottom. If you hold the real estate for cash flow the decision is more difficult. If the amount you collect in rent drops, and your property and income taxes go up, will you still cash flow? If not, you may want to sell now. If so you may want to hold on to it.
    As far as buying ammo and other emergency situation supplies...it may sound crazy to some but I don't think its a bad idea. Few people have the resources put away for a minor emergency. Look what happen with Katrina. It physically only affected a small portion of the country and yet their were still people who couldn't even get water. Not to mention the level of violence that took place. Can you imagine an economic situation that affected the whole country at once? I am currently holding a large amount of real estate, but I am in the process of selling off some of the lower cash flow producing properties and moving that money into gold and silver. I don't think we have come close to hitting the top of the gold market. As the dollar looses value more people will shift to gold and the price will rise. As far as I'm concerned I will prepare for the worst and hope for the best. I enjoyed all your comments.

    0Reply
  • Kevin Lunt
    Private Money Lender · Omaha, NE · Member since 2010 · 146 posts · 47 votes
    15y

    Good post, Shawn! Brian Tracy teaches to plan for worst-case scenarios!

    Case in point....I used to live in a large apartment complex here in Omaha, NE. I was probably the only crazy guy to have large water storage containers for emergency purposes. Well, we had a bad winter storm one year and the whole building was without running water for like a week. I had plenty for cooking, bathing conservatively (but I went to the gym for that!), brushing my teeth, washing my hands, drinking, etc. You get the picture.

    Also, growing up, my family kept a food storage supply for emergency purposes. Like insurance, it gives peace of mind and you hope you'll never need it, but if you do, you'll be glad its there.

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  • Rich Weese
    Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    15y

    Kevin- My religion teaches to be prepared and food storage and water is the cornerstone. As well as 6 months supply of cash for expenses . We don't teach guns and ammo but many LDS (Mormons ) have them also... Rich

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