All Forum Posts by: James Park

Atlanta is the 3rd lowest valued housing market after Detroit (#1) and Cleveland (#2). The overall population decreased in both Detroit and Cleveland between 2010 - 2013, but Atlanta's MSA population grew by  236,214 between 2010 - 2013. Atlanta's housing appreciation by Dec 31st, 2014 should be right around 7.1%.  

The only two metro cities that have surpassed its previous peak and setting new highs are Denver, Colorado, and Dallas, Texas. I believe that Atlanta housing prices should reach back to its previous peak of July 2007 sometime in mid to late 2016. We are still about 11% away from our previous peak and I believe that Atlanta housing market should outperform inflation in 2015 and 2016. Atlanta is still a very strong "value" buy and hold market compared to the rest of the country and I continue to remain optimistic as a long term buy and hold investor in this market. 

Two Atlanta markets I would stay away from are Henry and Paulding County as more than 35% of the housing purchases there are by hedge funds and institutional investors. Single Family investments in the "A" neighbors and school clusters will continue to outperform the average appreciation of home prices in Atlanta. 

@Robyn Coady

The wisdom here is to invest in what you have great wealth of knowledge in. I have a friend from college who grew up from a solid middle class family who made his first million from scratch. He now possesses the financial IQ and investing experience of the how to turn his first million net worth into  $3M, then to eventually into $5M. He is a man with a financial plan. I have another friend from college who inherited a million dollars from his wealthy Asian parents overseas and grew up from a affluent household of privilege. He ended up spending and losing much of his million dollar inheritance from bad investments in both equities and real estate. He lacked the financial IQ and investing experience that my other friend possessed.

If i won the lottery, and suddenly had access of $1,000,000 dollars in tax free money. I would allocate this money the following way, but not invest all of the money at once. I would carefully allocate the money in a gradual manner.

30% allocation: $300,000

My own business (S Corporation) - highest risk, highest reward. If there is a business idea you are passionate about and you have great wealth of knowledge and industry experience in the business you want to start, I would give it a shot. This is one category, I believe one can quickly accelerate their networth faster than real estate. I would expect a return anywhere between 25 - 50% annual. 26% annual return will double your net worth in 3 years.

30 % allocation: $300,000

I would allocate this amount to building a solid single family homes rental portfolio in a "A" school district zone in a high growth emerging area. I would expect average returns of 15% - 18% from my real estate investments. 

20% equities and stocks : $200,000

Right now the stock market is over heated and is not a good time to buy now. I would wait for a substantial correction in the DOW or S&P 500 and take a buy and hold strategy. If you have no investment knowledge in the equities market, I would recommend buying the S&P Index 500 which will beat the performance of 80% of all fund managers over the long run. If you are an experienced investor and believe you are among the talented top 20% who can consistently outperform the S&P 500, I would create my own hedge fund. Investing in the S&P Index 500 I would expect an average return of 11%/year over the long term horizon.    

20% cash and money market : $200,000 

Cash is king when we are headed into a deflationary market environment. Cash in hand will give you peace of mind if the market suddenly turns for the worse.

It appears to me that the two metro cities that have already surpassed the previous peak median home prices are Dallas and Denver.

 Interestingly the Dallas housing market was pretty much recession proof during the house crisis when most metros areas fell as low as 20% like the Charlotte market and as much as 60% like the Vegas market. Dallas only fell 10.7% from its peak in Aug 2006 to its bottom in Feb 2009. The Dallas market quickly surpassed its last Aug 2006 peak as early as April of 2013.

Why was Dallas housing market recession proof while all the other metro area markets almost fell off a cliff? Why are now seeing higher appreciation in Dallas than we have ever seen in the past?

The appreciation in the Dallas market was very modest averaging about 3.3% from 2000 - 2006. Now we are seeing appreciation of 10.21 in 2013 and likely to be at 9.3% appreciation by year end 2014.

Do you believe that appreciation that will take place in Dallas in the future will be unprecedented from 3.3% average appreciation we have seen in the past? Do you believe close to 10% appreciation is sustainable in the Dallas market going forward?

@Azeez K.

Awesome! I would love to attend and meet new Atlanta BP members!

@Anna Shaver

Dear Anna,

Achieving a passive income of $100,000 is a very ambitious goal. I have not met many members in bigger pocket who have achieved this goal who started from scratch and who have built this type of portfolio on their own. I know of maybe 5 BP members who have achieved this.

According to the 2011 IRS records, an average American household makes $51k a year. To be able to make double this amount passively is the number I believe where one is truly rich/wealthy and in the early stages of financial freedom.

I prefer to reach my passive goals with the minimum number of assets as possible. I personally find it that 10 SFRs that can generate $100k in passive income is much easier to manage than 50 SFRs that generate the same passive income. The type of asset I prefer to build my retirement portfolio is "A" class SFRs.

In my farm area, which is the northern suburbs of Atlanta, one needs to acquire around $1.3 million dollars of Assets with no debt service to reach the $100,000 passive income. Your assets will continue to appreciate while your retirement SFR portfolio will provide you a secure financial future for a life time.

If you have a $1.3 million equity portfolio where you have withdraw $60,000 a year for next 21 years, you will have nothing after 21 years. You can clearly see that real estate is a superior path to retirement.  

Hope this information helps.

-James

@Minh Le

As a young investor, I would always try to listen to CNBC and see what other hedge fund managers had to say about the future of the market because I always thought they were smarter than I was and their investing knowledge was superior than mine. Why else would they be speaking on TV? 

I would consistently search for the latest comment from John Taylor, the largest hedge FX fund manager and founder of FX Concepts LLC. He had at one point $14 billion dollars under management. Sometimes, I would disagree with him about his forecast and over time I would find out that his forecasts on certain currency markets was wrong, while my own research and theory became a reality. FX Concepts LLC later filed for bankruptcy.

Today, I no longer search for what other hedge fund managers have to say or what Peter Schiff at Euro Pacific Capital has to say. I rely in my own research and listen to my own inner voice when investing and managing my own equities portfolio.

We are now 15 years into the 18 year bear market cycle. You mentioned that history tends to repeat itself and I agree with your statement. Since the inception of the DOW Jones from 1897, the cycles have consistently shifted every 18 years. Unless I see a break in this cycle shift, I will continue to believe in the 18 year stock market cycle.