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Jim Rogers Sells Manhattan Home
Old 02-15-2008, 12:01 PM   #1
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Jim Rogers Sells Manhattan Home

Investor Jim Rogers is selling his Manhattan home for 15.75 million and moving to Singapore. He purchased the home in 1976 for 107K. Works out to a 17.5% compound annual return.

Jim Rogers' Interview
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Old 02-15-2008, 12:11 PM   #2
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Originally Posted by FIRE'd@51 View Post
Investor Jim Rogers is selling his Manhattan home for 15.75 million and moving to Singapore. He purchased the home in 1976 for 107K. Works out to a 17.5% compound annual return.

Jim Rogers' Interview

Somebody way overpaid. At the historical (since the dawn of time) 4% annual appreciation rate the home should have sold for $375,365. I hope they had a big down payment.

4% appreciation my *ss.
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Old 02-15-2008, 12:36 PM   #3
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honobob.. did you ever think that extraordinary RE appreciation at the highest end of the market MIGHT be correlated with the richest few% making the most gains in income and wealth over the last few years.. while everyone else is running in place? At the high end there's WAY more money sloshing around still.

There are bottles of wine that sell for $5k, $10k, even $100k.
I don't use that to figure my grocery budget.
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Old 02-15-2008, 01:19 PM   #4
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I would be interested to find out what that $107000 in 1976 paid for. The plot of land the house sits on?

I looked at the records for my house in a non-bubbly mid-sized city in my southeastern state. In 1976, it sold for $34,600. So the NY house Jim is selling was about 3x as expensive. I find it hard to believe that one could purchase a 10,000 square foot 6 story house in Manhattan for only 3x what it cost to buy a very modest house in what was a small-ish town 30 years ago.

Was the 1976 NYC real estate market really that bad?

Also consider than Jim may have invested a buck or two (million) in updating the house over the years.
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Old 02-15-2008, 01:24 PM   #5
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For the other side of the story:

Top investor sees U.S. property crash | U.S. | Reuters

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
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Old 02-15-2008, 01:31 PM   #6
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For the other side of the story:

Top investor sees U.S. property crash | U.S. | Reuters

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
Wonder if that 40 to 50 % is total or another 40 to 50 % drop. That would mean my property would drop about 70 % total
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Old 02-15-2008, 01:34 PM   #7
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Originally Posted by free4now View Post
For the other side of the story:

Top investor sees U.S. property crash | U.S. | Reuters

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
Interesting that he made this prediction and put his house on the market almost one year ago (March 2007)... and it took him until December to sell his house.
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Old 02-15-2008, 01:40 PM   #8
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Investor Jim Rogers is selling his Manhattan home for 15.75 million and moving to Singapore. He purchased the home in 1976 for 107K. Works out to a 17.5% compound annual return.
There should be a separate appreciation index for island real estate.

I can't imagine leaving a familiar territory at a relatively advanced age just because the economic fundamentals are shifting. Sure, I can understand hedging against the dollar and teaching your kids the next great language, but why does a place you've lived in for so long suddenly become unsuitable? Does he feel that Singapore offers an equivalent amount of civil liberties and personal independence to Manhattan or Canada? Is he unable to extract any further novelty from familiar surroundings? Is he bereft of other family (besides spouse & kid) or does he expect them to visit him in Singapore?

He could've kept the place and rented it out. He doesn't sound like he's hurting for cash flow ( I could be wrong) but he seems to be raising cash. Maybe he thinks he's gonna make a killing in Singapore real estate.
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Old 02-15-2008, 01:44 PM   #9
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Wonder if that 40 to 50 % is total or another 40 to 50 % drop. That would mean my property would drop about 70 % total
It would have to be 50% on top of 50% to revert to the mean and get closer to the true value of $375,000
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Old 02-15-2008, 01:46 PM   #10
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I wonder if living on the equator where it's the same temperature all year round (link) with quality access to direct long haul flights to everywhere in the world had any influence on his decision? It's a great place to FIRE.
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Old 02-15-2008, 01:48 PM   #11
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Was the 1976 NYC real estate market really that bad?
In 1976, NYC was on the verge of bankruptcy, so it was the bottom of the real estate market - much like buying stocks in mid 1982. Also, the upper west side is much more fashionable today than it was in 1976. In addition, Rogers probably put a lot of money into updating the place over the years.

I think a normalized rate of return on NYC real estate has probably been in the 8-10% range.
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Old 02-15-2008, 01:51 PM   #12
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honobob.. did you ever think that extraordinary RE appreciation at the highest end of the market MIGHT be correlated with the richest few% making the most gains in income and wealth over the last few years.. while everyone else is running in place? At the high end there's WAY more money sloshing around still.
Exactly my point! And if you invest in or near these areas some of that sloshing will affect your appreciation. My original Diamond Head purchase, now a $400,000+ one bedroom condo is THREE parcels away from a $27,000,000 single family home. You don't have to buy a $10,000 bottle of wine if you're a busboy in a swanky restaurant. "A toast to the Crumbs!"
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Old 02-15-2008, 02:37 PM   #13
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In addition, Rogers probably put a lot of money into updating the place over the years.
I think a normalized rate of return on NYC real estate has probably been in the 8-10% range.
I wonder if we'll ever get the straight story on his basis and his appreciation.

I suspect that a lot of homeowners "forget" all the kitchen & bath renovations, room additions, appliances, roofs, yardwork, coats of paint, and other improvements made between a home's purchase & sale.
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Old 02-15-2008, 03:07 PM   #14
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Well at 10% appreciation rate that the New Yorkers claim then he'd have to upgrade enough to get $13,500,000 more. So if fireplaces return 130% on the dollar that would be how many fireplaces?
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Old 02-15-2008, 03:11 PM   #15
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Ah yes, Jim Rogers, the Bill Gross of the commodity world. The guys who give new meaning to the phrase "talking your book."
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Old 02-15-2008, 03:23 PM   #16
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Well at 10% appreciation rate that the New Yorkers claim then he'd have to upgrade enough to get $13,500,000 more. So if fireplaces return 130% on the dollar that would be how many fireplaces?
If you discount the 15.75 million for 31 years at 10% you get 820K, which might have been his basis, taking into account improvements, etc. Nevertheless, I would expect that Rogers' ROR would still be better than the normalized average for NYC because he bought at a trough (1976), and also benefited from the relative improvement of the upper west side. In other words, Rogers most likely realized some "alpha" on his investment.
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Old 02-15-2008, 08:12 PM   #17
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He doesn't sound like he's hurting for cash flow ( I could be wrong) but he seems to be raising cash. Maybe he thinks he's gonna make a killing in Singapore real estate.
Aha! I think you have it right.

Guys like this really love making a deal, and to me, a move like this absolutely shouts that he has something in the works.
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Old 02-16-2008, 08:15 AM   #18
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Singapore's a nice place. I'd probably pick it over NYC myself, especially for raising kids.
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Old 02-16-2008, 08:45 AM   #19
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Old 02-16-2008, 11:22 AM   #20
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Ah yes, Jim Rogers, the Bill Gross of the commodity world. The guys who give new meaning to the phrase "talking your book."
I'm not even gonna get into the subject of being 70 years old with a four-year-old daughter and a pregnant spouse.

Sounds like he's talked himself into a corner at an age when most are content to rest on their laurels, enjoying their wisdom & benefits of their accomplishments. Even if this spurs the sale of another 100,000 copies of his latest book that's what, another $100K? Can't argue with Singapore as a locale to raise your kids but I'm not sure I'd be ripping out my roots (speaking metaphorically, not follically) at that age and for such speculative returns. And then there's the imperial geopolitical risk of itty bitty Singapore right next to China, but I'm sure that everyone's commodity property rights would be respected at least as much as the last time that sort of thing happened to that "country".

Speaking of real estate appreciation rates and "alpha", I wonder how we account for the drag of taxes on investment returns. I'm paying 4.5% excise tax and another $2066.78/year property taxes in the hope expectation of collecting $33,600/year in gross rent. In other words I'm paying an annual expense ratio of 10.6% on $33,600 cash (or a 0.6% expense ratio on a $600K asset paying a 5.6% "dividend") before I've even sat down with Schedule E to try to erase our rent "profits", let alone dealt with the other carrying costs. 0.6% is coincidentally the expense ratio of the most expensive index fund in our ER portfolio.

Surely the annual tax load on Manhattan real estate carries an "expense ratio" a bit higher than the average index fund, let alone Vanguard or the TSP. Reminds me of the canard about how Trump should've just put his inheritance into S&P500 index funds and gone fishing for something other than supermodels & prenups.
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