You never fully own real estate, and your property taxes are subject to the whims of bureaucrats. Real estate is not very liquid either. If you needed to leave the country in a hurry most of our stacks would fit tidily in a carryon.
Just my opinion.
You never fully own real estate, and your property taxes are subject to the whims of bureaucrats. Real estate is not very liquid either. If you needed to leave the country in a hurry most of our stacks would fit tidily in a carryon.
Just my opinion.
1.) it's not, that is my point. You own the paper, not the asset. You bought into a derivative, which is backed by nothing more than fiat which is the main reason we have to worry about inflation destroying wealth to begin with.Originally Posted by Jordan
2.) right, someone else bought them. You own a share of a company that makes a bet whether or not that person can pay their loan. You are not even betting that the housing market will rebound in price, you are betting that consumer credit has bottomed. You are looking at the wrong charts!
If you were even talking about owning properties to rent, you'd still need to be more concerned about incomes since you are making the argument that your investment has cash flow. That's only true so long as people can pay rent. In an inflationary environment, you cash flow is getting competition from things like, food, heat, and baby formula.
I have look at all those charts. The one you are ignoring however is price to income. After you get done with that simple one, you also might want to look at Loan to Value. If if you are really brave, look at consumer credit.
Not to mention what happens in a deflationary depression economy. If you're gonna buy real estate maybe it would be best to buy in the depths of the depression, after the collapse.
he's talking about pooling funds with a REIG to buy and flip, or buy and rent. It's a decent way to get a foot in the door, but hardly an inflation beating proposition since even folks with 100% ownership without the overhead of a REIG are gonna have a hard time beating inflation with RE in the current climate.
If you were a DIY'er, yeah. If you manage your own properties, yeah. If you have access to a line of credit, yeah. If you are willing to buy the worst of the lot, and hold out for the entire neighborhood to rebound (assuming it does) yeah.
But if you are gonna drop 25k into a REIG and have paper on 25 properties, and get $250 a month income stream, umm.. you are aren't really hedging against inflation. Since its gonna take 8+ years just to get your initial investment assuming no inflation at all. What's worse, you can't even decide to sell those properties when you want cause you are part of a group. You also can't get a line of credit against those properties ASSUMING the value goes up, since again, you don't own them.
Better to drop that 25k as a down payment on an 80k fixer upper, get a 10-15 year loan with lowest possible rate, make double payments to build equity, and PRAY that the market rebounds in 5 years.
You contradict yourself here. It's very easy to make more real estate, and we've been doing it since the first mud hut was built.
There is SO MUCH real estate out there that is either in foreclosure or underwater, giving the owners very little opportunity to move or sell. I believe it's called SHADOW INVENTORY. There is no housing "recovery." The banks have given the leeway to hold onto bad mortgages for up to five years, letting the houses sit vacant, deteriorating, as the Fed buys them up. Fantastic.
You will not get consistency from a group called the "board". Your own post is proof of that. Find inconsistencies from the same poster. Like going to the exchange, half will yell "buy" and half will yell "sell". If you are expecting something different, that is your misunderstanding.
True. Which is why I like investing in it.
I don't make the rules, I just play by them. Ben Bernanke and company are making homes excellent investments, so I'm just following their lead. Don't hate the player; hate the game.
Last edited by Jordan; 12-10-2012 at 11:20 AM.
First, the numbers you used are off both as a proportion and in real terms, however, your thinking is ridiculous. Anyone who slaps $25k into something and gets $250 a month out of it in pure cash flow is doing really well; that's 12% per year.
The way you account for earnings is inaccurate. Over time, the value of the equity will increase as will the rental income stream because that's how inflation works.
1) You're a fool for thinking that everything corporate is somehow intangible, but okay.
2) Once the home is sold, it doesn't matter to me if they cannot pay their bills any more.
3) Some are rentals, but the best IRR has been in flips thus far, so I hope those keep going until it gets too big for the local market and it has to start buying to hold. Cap rates are incredible. Price to income is very affordable, hence why the home affordability index is hitting new highs.
Even from a single poster I can't get consistency.
Gold goes up over time because of inflation, I recognize that. Real estate goes up over time because of inflation and it cash flows during the period. No one is willing to admit that.
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