Benkea pumping his buy and extract cashflow RE system. No money down negative cashflow system. Price just doesn't matter because it only goes up. So negative cashflow no problem. Just buy and appreciate.
The franchise re brokerage business is a great one.
Buffett made the comment 2 years ago that he was surprised with the strength in RE.
I hear it is hot hot hot in Miami Vegas NYC phoenix and Calilalaland.
You like momentum so happy buying.
Every single indicator related to housing is flashing Red warning signs all over the place. Unfortunately we are in the midst of the greatest "credit binge" in the history of the US.
So for the record benkea you have made it quite clear you are bullish on housing in calilalaland. I am bearish and will remain so.
If your actual timeframe is 10 years or more, I think real estate is hard to beat. You could wait for the correction that they've been calling for for years, or you could just do it. Yes, it's possible to lose money in RE, but if the location (location, location) is good, the land isn't going to go out of business. I guess Buck's "The Good Earth" really made an impression on me as a HS sophomore. :o)
*or the numbers wont work*..been giving this some thought lately..I can find an excellent 2yr old property that will , with no mortgage, pay me , after other costs <eg, tax, maintenance etc> based on a 10 month rental that meets WEBs TX bond return of 4,5%...downside is, its' in an area where there are <obviouslY> not that many renters. I can plug in a minimal amount of cap .app. and it looks even better. I can the decide to live in it for 2 years, <min> <it's in a very nice , cosmopolitan area> and take any cap.app. tax free..what to do ???? , should I? should I not ? upside potential is more than TX 10 yr bond, and 2 years finding more out about an area I already know I like, downside potential, no renter, no capex, and suck up the selling costs <about the equivalent of a few good vacations in the same area...
I'd really be interested to know what folks think...and no <g> I'm not gonna tell you where it is,..unless someone shows me I really ought to go for it>:-)
seriously , any and all input welcome.
"Careful with those statistics. While I don't doubt that 24% of new home sales are speculative, don't confuse that to mean that 24% of the homes people live in are speculative."
I am not sure how you could come up with that from my post. People live in their own home. They buy rentals as investments. Seems pretty clear. If they are HIGHLY leveraged with ARMs in a rising interest rate environment, with some of the leverage against their own home, they are playing with a very hot fire. You can only margin 40% of a stock, and that level is dangerous, but you can leverage 90-100% of a rental property. I have a friend with 9 properties bought over the last 2 years, spread around the country. Most of these people have price appreciation built into their assumptions or the numbers won't work. We will see.
"That's the difference, to me, between housing and investing."
Hmm. The biggest difference is you get to live in your house. The closest you can come to that in stock investing is when you buy dividend-paying companies. My favorites: SJT and ACAS.
Hmm. Well, I was just going to pontificate on how much trading equities investors would do if they had to pay a 6% fee (realtor), plus $2000-$5000 (or more) moving fee, plus another 1 or 2 percentages of fees to escrow etc everytime they traded. But I won't. ;) That's the difference, to me, between housing and investing.
JC, I haven't gotten into this fray 'cuz I don't have a dog in the fight. But c'mon! Ben's never once been a proponent of what you accuse him of, and has debunked it many times. Give it up. It's worn out, been kicked to the curb repeatedly and it stopped being funny a long time ago.
(And FWIW, I'm fairly bearish on RE too....and I'm in the industry)
I have been basically bearish on the consumer and housing for several years.
If you want to see a fantastic report read the van der Berg report "The value Investor"
page 15-38. The facts are all there to look at.www.centman.com Graphs data it's all common sense.
This corection imo will be different in real estate than before in that it will correct much more quickly due to the record level of leverage. Just look at a few of the markets across us that stopped going up and then down. Denver for one is an absolute mess. In texas you can buy properties below replacement cost and early 1980's prices.
One thing about benkea he likes to dole it out but can't take any jabbing back.
On every corner there is some type of retail store and new micro retail concept to get the consumer to spend. When will this consumer binge end??????????