All Forum Posts by: James Park

@ned Carey, 

Yes. I agree with your comments that mortgage reits are vulnerable to rising interest rates especially if the financial reits are leveraged.

Just as the energy sector (nat gas, crude oil, agriculture) are beaten down, I think that the Financial reits are trading 21% below book value and the reason for this is the rising interest rates are already priced in causing these reits to trade at such distressed levels. Rarely will you see these financial reits trading at a premium, but from my research on average the financial reits have Traded at a 2% discount of its book value and I like how liquid these Financial reits are vs the brick and mortar reits. The Financial reits are immune to the crashing commodity prices we are seeing today, mortgages are secured and much healthier today due to rising property values than they were during our last mortgage melt down 8 years ago.

Bumping this thread. How many of you actually own financial/mortgage reits ?

@Brian Lacey,

So you are under the impression that Feds will raise rates in March not to lose face? Feds hiking the rates in March will strengthen the dollar and gold will fall. The commodities cycle peaks every 30 years : 1920, 1950, 1980, 2011. I do not think that Gold will surpass the last April 2011 30 year cycle peak of $1920/ounce. Gold was priced at $35/ounce in 1971 and peaked in 1980 at the price of $850. 30 years later, gold bottomed at $280/ounce in 2001 and peaked at $1920/ounce on April of 2011. The big question is whether going to see another low of Gold breaking down below $1000/ounce again. Gold plays two roles: 1) insurance to fear 2) as a currency which usually does not perform very well in a deflationary environment.

@Richard Dunlop, you are thinking that Gold will hit $900 this year with an equilibrium price between $775-$825.

@Tommy Dang says gold will do down t $800 this year.

@James Park, I say we are going to see Gold reach $1400 this year. The US dollar and the Euro will also hit parity, but I am not sure of the exact timing.  

Mark,

If you were to ask me, the appreciation in Colorado and Texas seem looks like what California was in the 1980s and 1990s. Look at your Proforma Analsis for the past 4-5 years. Did you become rich by your net cash flow, amortization of loan, tax benefits, or by fast appreciation. I would think your answer is appreciation.  

Home Prices in Denver and Dallas were among the top 3 metro cities with over a 10% appreciation. Atlanta metro only appreciated 6.2% for comparison.

I am in my late 30s and I am assuming you are too. There is a reason why we should be seriously listening to the wisdom and investment advice of @Jay Hinrichs and @Bob Bowling as they have been investing in real estate longer that you and I have been alive. 

Now THAT.. I must say looks like is a beautiful chart.

@Mark Ferguson, 

From a pure arbitrage play (selling overvalued asset) and buy (distressed undervalued asset I currently see  huge opportunities but the asset class will be outside of real estate. To take advantage of these great opportunities, you must think like a holistic investor. An investor who sees investment opportunities not just in real estate, but also in Indian banking sector, closed ended funds, and within the commodities sector that pays huge dividends. Certain attractive sectors I am looking at are selling at a book to price value at a 30% discount with a 15% yield. historically discounts for this sector is a 2% with a beta of .23. This sector is going to go extremely well in the years ahead.     

I like many of the wise advices that has been presented thus far of paying down your mortgage as quickly as possible and not chasing the younger attractive goose. 

What is your current debt to value at this time? If your equity is $1.3M, are all your mortgages greater than $1.3M? I know that you mentioned that you financed on either a 10 year or 7 year ARM, but I don't see mortgage going up very much in the years ahead.

It seems like you have 4 properties located in not so ideal area wheres the CAP Ex is increasing or difficult to attract quality tenants. Perhaps sell out of your 3-4 bad apples and pay down your mortgage.

Mark, my portfolio strategy is very similar to yours and I believe that buying quality assets will always trump quantity. I would prefer 10 quality SFRs in "A" neighborhoods ($200k) vs 50 SFRs in bad neighborhoods. The only two real estate asset classes I plan to own are either SFRs or Apartments complexes in good locations. I do not like multi-family and commercial investments for various reasons. Remember, the goal is not to reach 100 houses of crappy assets just for the sake of reaching your 100 SFR goal, focus on quality and your will much better off in the long run.

@Andrew Wallace,

Don't feel bad. I also got my MBA and studied finance as an undergrad. While in college, my dreams and aspiration was to become a hedge fund manager. Somehow, just like you and @Dawn Brenengen I became a full time real estate broker. Perhaps hedge funds will be in the cards of my last and final career.

Do you see the picture below? His name Ray Dalio, founder of Bridgewater Associates. He is my Hero. :)