I haven't been to this forum in awhile and when I just did this morning, I thought I was in a 5th grade school class with arguments. First, Freckle can be ignored practically and that is just me being honest. Freck, you're probably a nice guy, rich with investments, and get all the ladies, but I will say that your posts reflect "Rubbish" charts and spuculative recovery projections. I saw in a previous post where it shows a line graph of what year the FL metro markets will recover which suggested 2030'ish. I LOL'd at that a little, but to each his own.
I work in 2 states. I have a business in Northeast NJ where I have one of the highest volume producing teams with Weichert Realtors, and in Florida I work for Cushman & Wakefield, Commercial Property SW Florida. Yay for me, right? I'm only mentioning it because I trend like a M'n'F'er and my analytical background leads myself to believe that I'm right more then I'm wrong in my specific markets that I know best
I also have experience in trending the markets, something I did exclusively for a large bank in the past, the housing market is coming back in each market. Certainly the NY Metro area is different from metro areas of FL but by how much? Well, cost of living, density, and everything else. The truth is that here in FL, I am investing in property as well. I'm not looking to double my money by 2015, although that would be nice. My office is fielding calls daily from pharmaceutical companies, investment banks, etc who are looking to BUILD new facilities in FL, largely due to low land cost, no state income taxes, and huge tax incentives that FL is offering corporations for stimulating job growth. Forget NJ right now although it is on fire, but Florida is an area that is in a steep recovery and by the end of the year, you'll see a plateau in my opinion. Maybe Freckle is ignoring the alternative energy companies, and other corporate giants coming to the area. Sure, the economy isn't solely dependent on job growth but it is the leading indicator, isn't it?
Unless you are friends with Al Gore, FL is destined to be a haven for growth. Freckle is assuming another crash and assuming that if we did have a crash FL will see a decline the same way we did in 2006? Based on what? I'm not certain of an exact replication of the past. Unless some arrogant investment bankers reintroduce No Income Verification loans and ignore backend DTI rations. Ain't happening in my lifetime and I'm only 34.
If memory serves me correct, Freckle, don't you own property in Charlotte County that you bought 2-3 years ago? I own a home in South Gulf Cove in Port Charlotte. I also own a duplex in Rotonda West. I bought about the same time you did and my value is up 25% at least and based on income levels in the area, I see room for another 20-25% before a plateau. If you buy a home with FHA, it's STILL cheaper to buy then rent.
Have a great weekend everyone.
CHEEVES
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeThis will be a epic topic once Freckle gets on
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Cheeves,
Yes some arguments going to and fro and at times can seem a bit childish. What you have to appreciate however is that Freckle is playing the devils advocate. Nigel is presenting an arguement why we should buy in Florida…specifically the product he is trying to sell. Freckle is on the other side and pointing out that no factual evidence has been presented to date to support and backup their claims.
I'm not looking at Florida but from someone outside looking in….Freckle is presenting the more convincing story….be it right or wrong !!
Freckle does not prevent any story at all. He puts up graphs and states that people of population growth around the world we are going to run out of resources.
Secondly he says Orlando is dangerous because since 1924 3 hurricanes have caused damage. Orlando is two hours inland from the cost so in most cases by the time a Hurricane gets to Orlando it has dropped down to a storm.
Thirdly property is selling there again and speedy the reason why I like this market is because I believe there will be capital growth in this market over the next few years. However I am simply suggesting that people should at least have a look at the market.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Like speedy said, nigel isn’t convincing me at all. I’ve enjoyed watching the debate but it’s been very lop sided from where I stand. Factual evidence would shut every one up once and for all.
Since you are Freckles side kick that's a real surprise
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Cheeves welcome aboard. I always luv a good debate especially with someone who has a an IQ in the double digits.
Let me phrase the debate thus far. Nigel and Rob like FL. I couldn't care less other than to play devils advocate. I have no skin in this game at all. The current discussion is also oriented around the Aussy investor not your local cowboy so the implications are deeper.
I have a medium to long view of markets so I tend to comment in that context. My comments are primarily focused on investing not speculating which is a whole different ball game. So to summarise I'm commenting in the context of an Aussy investor with limited skill, knowledge and resources looking to invest in a foreign market for at least 5 years and up to 20.
So lets address your first point:
I will say that your posts reflect "Rubbish" charts and spuculative
and you refer to this chart specifically:
Charts with future projections are always problematic for most people. There's a tendency to take them literally and therefore dismiss them as unrealistic. Understanding them requires looking past the superficial data and interpreting what they're trying to convey. In this case Moody's are saying given their research they see those states and muni's as the most likely to be the last to recover and provide a projected timeline that it may or may not occur along.
2030 seems an awful long way away but in reality it's a mere 17 years. The areas indicated were probably the worst hit and given a rough average in property median price drop for FL was around the 50% mark these areas are likely to have seen worse and consequently recovering back to pre crash levels will in all likelihood take some time. If they could average 7%pa over the next 17 years they'll probably meet that projection. But hey 17 years is a long time so anything could happen.
OK next point. Your a main player as well as personally investing so I have to consider anything you say as having an element of industry bias. In saying that though you are least putting your money where your mouth is.. bravo!!
Next point: you've alluded to state initiatives and economic conditions as attractive elements to attract business, increased enquiry rates etc etc. I've already alluded to this up tick in commercial on another post;
You said;
Florida is an area that is in a steep recovery and by the end of the year, you'll see a plateau in my opinion. Maybe Freckle is ignoring the alternative energy companies, and other corporate giants coming to the area. Sure, the economy isn't solely dependent on job growth but it is the leading indicator, isn't it?
I don't necessarily agree with the idea Fl itself is in a steep recovery. There are property hotspots for sure but that makes me even more wary. By the time they've disclosed themselves the immediate opportunity has gone. They're projecting FL GDP at some where around 2 – 3% over the next 12 months. So what's driving this growth now? My analysis indicates it's a combination of states who offer better trading conditions, FED QE and hot money looking for a home. Businesses are gravitating toward economic high ground for self preservation not because they're looking to actually expand their operations as a rule. QE is now an absolutely necessity to just maintain the economy and hot money is fueling bubbles everywhere.
The problem I see with this so called recovery is that it is mainly synthetic and not organic. That lays at the heart of long term investing. So what happens when hot money slows or even stops, when QE is withdrawn (being considered at the moment). Corporate USA has shed jobs, shed inventory and is now moving to economic oasis in an economically growing desert. To me it's like playing poker on the Titanic. It may look and feel like your winning but if(when) the ship goes down you'd better have a lifeboat ready just in case.
In other words there's absolutely nothing underpinning economies other than some CB with their fingers on the CTL+P buttons. God help us when we run out of ink.
You have the benefit of local knowledge, experience and your not a foreign national investing with foreign currency. You have a head start in chasing down the best properties. My guess is that less than 1 in 10 Aussy investors will actually do OK in the US. The vast majority will either scrape buy or cop a flogging. 90% of them don't have the smarts, knowledge, experience, resources etc but most importantly the aggressive motivated approach to be hands on and in the the thick of it to survive.
Sorry Cheeves but I don't own property in the US never have. I don't own property at all these days. I'm working on dying in debt if at all possible. I can't take it with me and I'm sure as hell not leaving any behind if I can help it.
Nigel Kibel wrote:Since you are Freckles side kick that's a real surpriseYes I'm the one responsible with providing Freckle with all his data and stats. Your side kicks ain't doing much for you. More interested in attacking the man then answering questions.
speedy gonzales wrote:Cheeves,I'm not looking at Florida but from someone outside looking in….Freckle is presenting the more convincing story….be it right or wrong !!
LOL… for those following the thread I wouldn't suggest taking any information I reveal at face value. It's merely one perspective in a multifaceted world. Hopefully whatever information I do reveal broadens people outlook and illustrates that DD isn't something that can be defined as simply crunching a few numbers and ticking off a few superficial checklists.
40 years ago I wouldn't have bothered with half this stuff but given we're in the midst of global economic melt down investing is a far more complex and difficult exercise. There are far more downside risks now than there were 10 years ago. The old paradigms of investing culture are not as useful as they once were so we need to adapt to a more volatile high risk environment or see our loss rate rise significantly.
jmsrachel wrote:Nigel Kibel wrote:Since you are Freckles side kick that's a real surpriseYes I'm the one responsible with providing Freckle with all his data and stats. Your side kicks ain't doing much for you. More interested in attacking the man then answering questions.
Haven't laughed this much in ages…
Joe I'm going to promote you from unofficial Sidekick to Gofor. Sorry but the pay grade is the same. Monies are tight and we all have to make sacrifices especially non executive Gofors. Now go get me a beer this is thirsty work.
It would be nice if some of these threads didn't get sidetracked/bushwhacked. For what it's worth, I don't mind investing in Florida. I have three properties in the state: Ocala, Kissimmee and Fort Pierce. Ocala is a work in progress (a cheap quad), Kissimmee has realised a reasonable capital gain already and Fort Pierce has given good cash flow. The only thing that concerns me about Florida is the length of time it can take to evict problem tenants.
SamDaniels wrote:Kissimmee has realised a reasonable capital gain alreadyYou've sold it then. What did you net out of the deal after all costs and FX exchange variations. Give us some hard data.
Vague claims of profits are just fairy stories one rabbits on about down the pub.
Now isn't this a constructive thread?? Ok Freckle, let's give each other the benefit of the doubt and assume we each make good representations of our investing ideas. I'm licensed in NJ and FL so anything I state is likely going to be partially biased toward those areas. That said, I'm also a devil's advocate. Candidly, I have a good business in each state. Getting an Oz investor on my team isn't something that's going to make or break my bank but certainly I'd value any opportunity to work with anyone. I've worked with a lot of Oz investors, some directly from this forum who have asked me to keep their info private ESPECIALLY on this forum
I love you guys and those I've met happen to be great drinking buddies!Truth of the matter is that investing is based on overall risk exposure. If you go back to a thread I began a year ago here, I stated that investors need to utilize "old school fundamentals" of investing and that is CASH FLOW. I've since opened my range to upside as well..a lot. Why? Well, I'm a little hungover this morning so don't have the desire to dig into charts and graphs that will likely get criticized anyway, but let's just say that I've got a pretty good track record with instinct and I'll live or die with my decisions and partially, so will my investors who hire me to do so for them or as a part of their team. My long time clients have made and lost money with me but my average is over 62% which means at the end of the day we are on the plus side
Wait, that's a sports gambling statistic….ah well, same for real estate! I am doing 2 major construction developments that grade out very well for U.S investors. For a foreign national, might be on the fringe of a good deal, but likely something they would pass on. I'm basing this off of the convos I have with foreigners who want 10%+ Cap Rates or ROI. There are a lot of folks who slam Detroit because it's the ghetto and that Cap Rates are inflated. Probably true, but if you invest in good areas with limited risk exposure, the market is just not trading at double digit returns and in my opinion, if you are promoting a Class A or B neighborhood and showing ROI above 10%, that is a red flag to me…Not impossible, just not common. Florida has pockets that are good right now for similar reasons. Tampa, Ft. Myers, Cape Coral, Naples along the Gulf Coast are doing well because of job growth, low prices, tax incentives etc… Freckle, you say that the "steep recovery" is limited to certain areas of FL. I agree with you. That said, in those pockets of improvement, the growth isn't synthetic… It is organic as you dispute. In fact, in Ft. Myers (if I can present just one example), there is a Fortune 500 company that is looking to bring in over 500 jobs with an average pay of $105,000 if they are granted a $4 million incentive for development. Do you consider grant money synthetic? I don't. These grants have always existed for corporations. Synthetic growth are deals like the "First Time Homebuyer Tax Credit"…."Cash For Clunkers", etc. I call them "crutches" which would also mean synthetic… This Fortune 500 firm is not moving to the "desert" as you say, but they are moving to an area where population is denser, opportunity for perhaps "cheaper employment" exists for something they plan on expanding on, and cheap land, creating lower overhead. This is very real and very organic.
I read a market study for supply and demand of rental units in this area. The study was done by one of HUD's most reputable third party firms. When I see corporate growth, combined with what I saw in the report, it makes the decision to invest a lot easier. Problem is that this information is confidential and investors on the inside get there first and the foreigners get there last AFTER the good investors already exit.
Point being…..get with the right broker that you can get a good inside with. If you want to come in and invest $50,000 that won't get you much but ignorance from great agents and forced product with bad agents. True story. You want to be a player in the U.S if you have limited capital? Get together with a forum like this for a cup of coffee somewhere. Create the idea of Joint Venture. Guess who is willing to finance for foreign JV's? Yep, certain U.S banks, but only on commercial loans… so as you won't be able to finance a single unit home, how about an 8 unit apartment building, maybe 6…anything over 4 units is considered commercial and factoring $65k to 90k per unit on cost for land and construction, take that into considerating. The time for small time units are OVER. The pendulum has swung. Commercial is where it's at. I sell 1-4 unit buildings in NJ. I laugh at what investors buy them at. It's over market value and a bad decision on their part….but I represent the sellers up there so makes no difference to me. Shows me investors are stupid and their agents only care about the $$$.
I don't force product on anyone. I develop ideas, I brainstorm with the best, and I ask for my customers feedback. All of this information to you OZ investors is a waste. EDUCATION WITHOUT APPLICATION NETS YOU ABSOLUTELY NOTHING!! I see a lot of people crying on this board with most bashing brokers and properties, yet are afraid to touch anything. Put your minds together and make a collective informative decision. That's good business.
For those interested, I am going to post a Discounted Cash Flow financial model. This is the best way to analyze investment in my opinion. If I post and people call me out as "pitching something", I have to say I already sold this
I'm just showing an example of how I've been trained to analyze investment and probably something you could use to make better decisions here or in Oz. Some of you may already know this model but I guarantee most don't. I promise it's more complex then what you see on a realtor website showing A + B = C. It takes everything into equation besides location. Have a great remainder of the weekend. Hope I was able to elaborate a little. If I missed addressing anything, let me know and I'll fight back
Frozen Drink by the pool time!CHEEVES
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeCheeves I think that's one of the better on the ground appraisals this subject has seen for a while. If only our resident experts (I use the word loosely) could put together something as informative we might be further advanced.
In reality I don't think you and I are too far apart. I've always believed the US market is far more riskier for foreign nationals than they realise. 3rd parties tend to paint the picture a lot brighter out of self interest rather than any supportive data. I see the big picture as the underlying threat but I can see how an experienced local believes, even if they're aware of that risk, that it's manageable because they've confidence in their ability to manage any downside. I tend to think guys like yourself have far more elaborate and flexible strategies than your foreign buyer.
You're a hard core active player with fingers on the pulse and multiple eyes on the ground and yet your success rate is as low as 62%. I think that statistic in itself speaks volumes for the absentee foreign landlord who probably receives incomplete biased updates from industry players as his primary source of market info. As I've said before. To succeed an investor needs to be very aggressive and assertive that means being extremely active in monitoring the market and certainly being plugged in 24/7 to their investments.
You asked me; Do you consider grant money synthetic? Yes and no. A Fortune 500 company with 500 employees isn't going to be swayed by a $4mil grant. It sounds more like a back pocket stuffer for a few exec's rather than a grant. However, grants that make a deal financially viable for smaller business is synthetic. When tax payers have to subsidise business because business can't make a go of it other wise you know you're in trouble.
This Fortune 500 firm is not moving to the "desert" as you say, but they are moving to an area where population is denser, opportunity for perhaps "cheaper employment" exists for something they plan on expanding on, and cheap land, creating lower overhead. This is very real and very organic.
The F500 firm is moving from the dessert to an emerging economic island. So when wages rise, overheads increase what next? A move to the next cheaper location. If FL is so good why weren't they there before? This is a risk for FL. If it gets too hot too fast it will kill growth. It's happening now. As one area goes hot it reaches a point where competing areas suddenly become more attractive so the flow moves to the next best deals. Basic market dynamics. The hot zones see rapid growth then go flat. They move back to trend over time. It's a setup for a speculators/flippers market. It adds a dimension of risk for the medium to long investor. What appears good today may end up being a poor or average performer over time.
EDUCATION WITHOUT APPLICATION NETS YOU ABSOLUTELY NOTHING!!
I've always disagreed with this label. Industry rhetoric to get people to jump by belittling them into action. 6 will die, 2 will suffer irreparable damage, 1 will land unscathed and 1 will bounce and run.
EDUCATION IS NOT ONLY ABOUT WHETHER OR NOT THE DEALS ARE FEASIBLE OR NOT. THEY ARE ALSO ABOUT ASSESSING YOUR OWN ABILITY TO EXECUTE WITH A REASONABLE LEVEL OF SUCCESS.
Too many people are thrown in or jump in the deep end without the necessary practical skills to survive. Education is often useless without practical ability.
Your cashflow model will be interesting and I expect will offer some another valuable tool
Here's a small article on the F500 company being "lured" into the area. My mistake, it's NOT a grant, it's an incentive. It is different: F500 Article
Freckle: We can agree to disagree again on certain topics. When you ask why these companies haven't previously entered the FL market and are looking now. Well, they were looking in the past. The market crashed and that changed things quite a bit. There were several corporate headquarters that gave up deposits on land once the market turned just to walk away. I believe their insiders have kept FL on the backburner for a time like now. I have fielded calls from Pharmeceutical companies that will be either HQ'ing or building satellite facilities in the Airport Commerce section of town. There is more chatter for business growth in FL then there is in NJ, AZ, NV, etc…
Regarding my 62% win percentage, that was arbitrary. I wouldn't be where I am today at 62% but I will say that I have lost people money before. But I'm also trusted by corporate executives to make decisions on when and where to buy. So let's give me a little bit better of a win percentage then 62%
. My strategy with my long term clients is that if there is a deal that is a loser, get out early and get into something more favorable. Take a step back before taking a leap forward. I've seen too many agents ignore their losing customers which drags out losses and more pain. This is glaring in the foreign national clientele. Imagine me telling half of this forum that I don't like the investment I just advised you to buy 8 months ago and that I think it's a good idea to sell at 15% loss and buy another asset to make up for it. I'd get laughed at and probably banned from this board!! The financial model I will post calculates Cap Rate sensitivity. The rule of thumb in new construction for instance is that if you can't stabilize your property upon completion and generate an 8% Cap Rate, it's too risky. Anything above 8% is a good deal that should grade out well. It's simple actually.
Lastly, I don't believe more then 10% of agents have good references for Property Mgmt. In my area there are 1,000,000 PM's, and I would probably only trust about 4 of them. I've done business with many companies and the 4 I have narrowed are companies I have worked with for years as has my firm. They are the third party companies that make me look good or bad so I have a huge incentive to refer only the best….at least the best in my opinion. PM's rape the profit from deals if you get hooked up with a bad one. Don't even get me started on them..
One of the reasons I like commercial deals in SW Florida is because the residential side of it is a frenzy and it will cap out. It will become cheaper to rent then buy again until that ceiling deflates a bit. That said, it's not a bubble. The factors aren't in play for another bubble. There's no sub prime… There are no bad mortgages… It just means that the cash investors (60% of buyers) will generate more income today and less in maybe 2 years before year 4 see's another increase…NOT A CRASH…a softening if you will.
Lastly…foreign nationals…if they want to buy something…most are ignoring multi-family. They shouldn't. If you are looking for $100,000 or less to invest, that's up to you. Good luck. The smart money is on commercial multi-family.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone Me+10
At last someone who can articulate the realities on the ground and expand on some strategy. A somewhat better elaboration than our Property Know How Club leaders "just have a look", suggestions.
I don't share your optimism but like I've said you're probably the best person to be able to manage on the ground risk. A tough act to follow for an inexperienced foreigner. To even have a hope in hell they need to lock onto someone such as yourself.
I'll be interested to see this fin model you use.
I find myself to be technically inclined but I can't figure out for the life of me how to upload a spreadsheet to show my financial model. Any thoughts? Freckle: If you want to PM me your e-mail, I can send it to you and then you can share your thoughts with the forum?
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeCheevesFinancial wrote:I find myself to be technically inclined but I can't figure out for the life of me how to upload a spreadsheet to show my financial model. Any thoughts? Freckle: If you want to PM me your e-mail, I can send it to you and then you can share your thoughts with the forum?Sent you aPM
link to Cheeves spreadsheet
https://docs.google.com/spreadsheet/ccc?key=0Ag10nVvomrvSdERRMmVqTEZfMzdqWHZkMU42UENMLWc&usp=sharing
Any problems accessing it let me know
This is what we wanted to see, the numbers! I’ll look at depth tonight but at a glance looks impressive. Well done cheeves.
I also have experience in trending the markets, something I did exclusively for a large bank in the past, the housing market is coming back in each market. Certainly the NY Metro area is different from metro areas of FL but by how much? Well, cost of living, density, and everything else. The truth is that here in FL, I am investing in property as well. I'm not looking to double my money by 2015, although that would be nice. My office is fielding calls daily from pharmaceutical companies, investment banks, etc who are looking to BUILD new facilities in FL, largely due to low land cost, no state income taxes, and huge tax incentives that FL is offering corporations for stimulating job growth. 
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