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Bubble Schmubble!
Old 06-16-2006, 05:56 PM   #1
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Bubble Schmubble!

Ok everybody- lets get this bubble thing out of your minds.

Everybody should know by now, real estate is the best investment in the universe. It always goes up. And, it is higher now than ever. just because real estate has been hot, doesnt mean it is a bad investment. Remember, what grandma paid for her first house?

Pros: it is real and - it's nice to have it. plus, you can live in it and stuff. Besides, the rates are good. And, --will- you know its real estate! So, what I mean is, you cant' take it away... and, if it goes down, it just goes up again. My house is worth 150% more than it was 4 years ago.

Cons: There are no cons, only people who are negative.

I wish I had more real estate!




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Re: Bubble Schmubble!
Old 06-16-2006, 06:08 PM   #2
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Re: Bubble Schmubble!

Quote:
Originally Posted by blanston
Everybody should know by now, real estate is the best investment in the universe. It always goes up.
Except when it goes down.

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Re: Bubble Schmubble!
Old 06-16-2006, 06:11 PM   #3
 
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Re: Bubble Schmubble!

Quote:
Originally Posted by blanston
Ok everybody- lets get this bubble thing out of your minds.

Everybody should know by now, real estate is the best investment in the universe. It always goes up. And, it is higher now than ever. just because real estate has been hot, doesnt mean it is a bad investment. Remember, what grandma paid for her first house?

Pros: it is real and - it's nice to have it. plus, you can live in it and stuff. Besides, the rates are good. And, --will- you know its real estate! So, what I mean is, you cant' take it away... and, if it goes down, it just goes up again. My house is worth 150% more than it was 4 years ago.

Cons: There are no cons, only people who are negative.

I wish I had more real estate!






There is one thing that seems to be better than real estate! - That is the classes people are selling to get rich on it!
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Re: Bubble Schmubble!
Old 06-16-2006, 06:22 PM   #4
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Re: Bubble Schmubble!

Quote:
Originally Posted by blanston
I wish I had more real estate!
So, what's stopping you?* *Lots of people would love to sell you some.

Real estate is not a bad investment as long as you don't mind maintenance, tenants, property taxes, high brokerage fees, illiquidity, and the possibility of a multi-year slump.
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Re: Bubble Schmubble!
Old 06-16-2006, 06:58 PM   #5
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Re: Bubble Schmubble!

Quote:
Originally Posted by blanston

Everybody should know by now, real estate is the best investment in the universe. It always goes up.
So many ways to respond to that comment. Hmmmm. How about this: It doesn't always go up any more than the stock market does. Sure, Granny paid $4,000 for her house back when the dinosaurs roamed the earth, but a loaf of bread cost 12 cents and the breadwinner probably thought he was hot stuff if he brought home $40 a week. Everything goes up over the loooong run, but in that time span there are a whole lot of ups and downs. If you need to sell when its down I guess you're just screwed. Or you could will it to your grandkids and they'll marvel about your great real estate prowess while they wonder why you worked until you were 90.

Just because the cat has her kittens in the oven doesn't make them biscuits.
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Re: Bubble Schmubble!
Old 06-16-2006, 07:26 PM   #6
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Re: Bubble Schmubble!

Quote:
Originally Posted by blanston
Ok everybody-* lets get this bubble thing out of your minds.

Everybody should know by now, real estate is the best investment in the universe.* It always goes up.* And, it is higher now than ever.* just because real estate has been hot, doesnt mean it is a bad investment.* Remember, what grandma paid for her first house?

Pros:* it is real and -* it's nice to have it.* plus, you can live in it and stuff.* Besides, the rates are good. And, --will- you know its real estate!* So, what I mean is, you cant' take it away... and, if it goes down, it just goes up again.* My house is worth 150% more than it was 4 years ago.

Cons:* There are no cons, only people who are negative.

I wish I had more real estate!




I know where you can get more, PM me and I'll hook you up.

Real estate is great until you try to get rid of it, then it's a pain in the a**.
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Re: Bubble Schmubble!
Old 06-16-2006, 07:39 PM   #7
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Re: Bubble Schmubble!

Real estate can be a good invetsment, but most people think that their profit is the difference between the purchase price and selling price. They forget to factor in all of their interest and maintainance expenses and taxes into their cost, which inflates their "return".
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Re: Bubble Schmubble!
Old 06-16-2006, 08:52 PM   #8
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Re: Bubble Schmubble!

Personally, I am a big fan of real estate in a diversified investment portfolio. I am gonna go out on a limb and say "You will never lose money on real estate if you buy it right". That is the key- buy it when it is on sale or distressed. For those who complain about upkeep etc..good commercial properties have triple net leases where the upkeep and maintenance is paid for by the tenants - these properties typically return 8% cap rates - plus any capital gains. When you factor in the power of leverage, capital gains potential, postive cash flow(income), and the lack of correlation to other asset classes, real estate makes great sense. If you are really really lazy you can always buy REITS. The only problem with that is you lose all of the benefits of leverage and REITS are highly correlated to stock prices. Thats my two cents....bubble schmubble!
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Re: Bubble Schmubble!
Old 06-16-2006, 10:46 PM   #9
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Re: Bubble Schmubble!

I think Blanston really baited you folks just to see what kind of response he would get.

We like real estate and own quite a bit of it.

It can be a fantastic investment especially if you can find rental properties that have a positive cashflow including management fees.

It can also be a nightmare investment that can bankrupt you extremely fast.

The good and bad thing about realestate is leverage. put 5% down on house and control 100% of asset.

$5,000 down on a 100,000 house sell for $120,000 = 10,000 transaction fee and 10,000 profit or 200%. return. pretty cool
but

$5,000 on a 100,000 house sell for $90,000 = $9,000 transaction fee and $19,000 or 400% loss. that sucks . At least with a stock you can only lose 100% of your investment.

But if you can buy property that has a positive cashflow from day 1 then you can hold onto it (maybe even make a little money) until the property goes up (maybe 10 years) and do really well.

Real estate does go down. It has gone down many times and it is currently is going down in some markets. I would hate to be on the wrong side of that leverage and have to sell a $700,000 house for $600,000. This is currently the situation my neighbor is in.

Be careful out there.
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Re: Bubble Schmubble!
Old 06-17-2006, 12:29 AM   #10
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Re: Bubble Schmubble!

Quote:
Originally Posted by bearkeley
I think Blanston really baited you folks just to see what kind of response he would get.
I suspect you may be right

Your response, and those of the others here, contained some very accurate statements. While I'm more familiar and comfortable with securities as my investment of choice, I'm certainly not against real estate as an investment.

My concerns come with planning an exit strategy - an area of my investment knowledge and skills that I'm working hard to develop. Liquidity in equities gives me a decent shot at selling before my losses become greater than I want, and the fact that I don't buy equities on margin protects me from being upside down in an investment. But, I can't say the same for leveraged real estate.
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Re: Bubble Schmubble!
Old 06-17-2006, 07:06 AM   #11
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Re: Bubble Schmubble!

Hmmm

I have a mining engineer BIL blankston should meet - after 30 yrs here and there in these United States - he's only underwater about 20k in RE. The pain must be dieing off - since they are looking in the greater Seattle area now.

heh heh - the remodeling contractor remarked yesterday about a relative gripping about 'those evil Californacans 'running up WA and OR real estate prices.

Sigh - shades of the early 90's.

Location, location, location - and all that stuff.

I view the joint I live in as a money pit - sort of like a boat - to be enjoyed.

heh heh heh heh - I need a second cup of coffee.
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Re: Bubble Schmubble!
Old 06-17-2006, 12:29 PM   #12
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Re: Bubble Schmubble!

The discussion is 100% regional. For example, in my town, Portland, Oregon, it is impossible to buy property that is cash flow positive. If I were to buy the condo I currently rent, it would cost me 2x my current rent.

IMO, it's dumb to buy an investment that requires all the stars to align in order to NOT lose your shirt. If the investment requires high wage growth, continued low interest rates, continued loose credit, continued lack of high return competing "investments", continued real estate "buzz", etc., a huge leap of faith is required to overcome large negative cash flow.

The longer this party goes on, the worse the hangover will be...

Jon
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Re: Bubble Schmubble!
Old 06-17-2006, 02:28 PM   #13
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Re: Bubble Schmubble!

Quote:
Originally Posted by bearkeley
It can be a fantastic investment especially if you can find rental properties that have a positive cashflow including management fees.
If you tried to get people to buy cashflow stocks on margin, like Eagle Bulk Shipping (EGLE) or Berkshire Hathaway (BRK.B), the vast majority of them would run away screaming.

Yet somehow it's considered OK to buy a depreciating asset on a piece of (presumably) appreciating property (at approx the long-term rate of inflation) for which you're willing to borrow 80% of the money that you'll pay interest on for 30 years. The government will even subsidize, securitize, and reinsure that loan for you.

I'll run away screaming when the government starts doing the same thing for S&P500 stocks that it's doing for today's homes.
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Re: Bubble Schmubble!
Old 06-18-2006, 06:32 AM   #14
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Re: Bubble Schmubble!

I sold my VG REIT fund last week. Nice profit. Might buy back someday. Don't know about the bubble thing it just seems like a really good time to lock in some profits.



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Re: Bubble Schmubble!
Old 06-18-2006, 07:45 AM   #15
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Re: Bubble Schmubble!

Yeah, real estate is great if you know when it's going up, when it's going down, and you live 90 years or so. But wait, that's a prescription for successful market investing. And the market's more liquid. I have a VG REIT index fund. That's the only RE exposure I need.
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Re: Bubble Schmubble!
Old 06-18-2006, 08:04 AM   #16
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Re: Bubble Schmubble!

Yep

REIT holder here also(now in individual stocks). Only did so so in RE over the decades (60's, 70's, 80's, 90's).

Taking a SWAG of retired aerospace engineers I knew - about 1/4 got their nest egg from various forms of RE. Including three that kept their CA houses from the 70's and rented them out.

Those durn (lucky??) Cali - forn a cans!!!!

heh heh heh heh heh - me? I done best in stocks.
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Re: Bubble Schmubble!
Old 06-18-2006, 07:50 PM   #17
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Re: Bubble Schmubble!

somebody once said there is no such thing as a bad real estate investement- only bad terms or bad price.
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