Lawsys
Go to Google earth..
Willamina Oregon,,, then follow the main road north out of town past the saw mill you will see on your left, 1 mile up on the right you will see our ranch… It has a nice valley running right up the middle and a nice elevation change from 500 to 1200 ft MSL. I want to put a little pond on it in the next few years and stock with trout. I subdivided 10 lots off and sold them for homesites and they are all built out. This paid for the remaining acreage. And you will see we have about 300 acres of 50 year old Douglas fir.. Whence the fir becomes 60 years old we start logging.. Bout 250k in NET revenue per 20 acres. so we will take about 15 years to harvest the timber and replant it all… This is my nest egg retirement and like Frekle likes to talk about my HEDGE…. Timber just keeps growing and if you can hit the peaks of the log market with mature stands its very profitable. At the end of the day we replant it all and My kids and grandkids will harvest timber to help in their retirement.. Its set up in a trust to never be sold.
I love the Timber business in the right market there is nothing more profitable in the US>
Timber Barrons were right up there with Railroad Barrons and Steel Barrons in their day.
See Jay, again its Australians (or kiwi’s) not being used to scale:) 300acres of Fir trees is a lot of timber, but looking at it another way it is just a very big untrimmed hedge – in the trues sense of the word:)
I look forward to googling your paddock – it is absolutely stunning country up there. You are very fortunate – enjoy it !!
A Hedge 125 feet tall with trunks 3 to 5 foot at the butt.
Its nice there for sure, but its country living for sure… have to drive 90 minutes for Sushi
jayhinrichs wrote:have to drive 90 minutes for SushiWhich is obviously why you want to stock trout:)
jayhinrichs wrote:I guess I just look at how my business is going from a macro level then micro level.You got burned last time because you didn’t see it coming. No excuses this time amigo.
And things are just Soooo much better now than 2 years ago…
I disagree. I think that’s an illusion supported by massive QE. 90% of sheeple think things are fixable and all will be well because gubermint says so.
housing is a big driver in the US economy,, 2 years ago in the Portland Market that had been building 12,000 housing units a year, in 09 we built 700…. Total crash, I would say 90% of builders and small subcontractors went BK.. I might be exaggerating a little but it was a melt down. 2010 saw 2400 permits pulled… 2011 3800… and 2012 will top 5,000, I personally have 7 Presold homes going right now for clients… I had not had a pre sold new construction home in almost 5 years.
Housing is a huge driver in all modern economies but unfortunately it’s a highly manipulated market that attracts too much mal-investment hence the regular boom bust cycles.
US citizens with money in their IRAs and there are trillions residing there have access to it on demand either through loans and or cashing them out,,, however there is a penatly if you take it out early. In our TWH model 8 out of 10 of our sales are US IRAs.
We have similar programs here called self managed super. I believe they can invest in RE with fairly strict limitations however I’m no expert in that area.
I am not an economist by any stretch just an investor and builder, who has lived through 3 of these cycles since 1980… the GFC of course was the worse.
It’s the point I’m trying to make. There’s this blasé attitude to the GFC as if it’s over and contained when in reality nothing got fixed and if anything they simply delayed the inevitable collapse along with making it magnitudes worse. If you thought the GFC was bad you ain’t seen nothing yet.
I’m actually fascinated to see how $707 trillion in derivatives unwinds. That’s a mega disaster in itself!
Ones that are picking up the better properties.. They are buying them for 30 to 50% less than replacement costs. And even if rents went down 30% they will still be positive cash flow,,,
This is a major flaw in investment thinking. Most people can’t get their head around a worse case scenario. It’s simply too bad to contemplate. People rationalise to make things emotionally and psychologically manageable. This rationalisation is almost always in favour of a positive outcome or at least survival.
The problem I see is that you already have an incredibly stressed (financially) population with a significant percentage too near tipping point if another down turn comes. Even if we only had a GFC event comparable to the last its effect would be significantly worse given we haven’t recovered one iota from the last. If I was looking at worse case scenarios 30% rent declines wouldn’t cut it. I would be contingency planning for 80% or worse 0.
So as I saw my Real Estate portfolio that I amassed before the crash, come tumbling down in value,,, I set out to buy 100’s of these properties so I could income average out my portfolio… So far so good.
Snap!! I’ve done the same with silver investments 24% down so far ouch!!
I suppose if we have total devaluation and social melt down then, it will be about food and water… And I have that covered. I will simply move out to my 500 acre Tree farm in Rural Oregon which has no debt, and live off the land I have a nice 3bd caretakers cabin on it with a big shop….. Set up a little portable saw mill, trade lumber for goods, grow my own food,,, Take Venison or the occasional Elk when I need meat that sort of thing, Salmon and Steelhead run in the rivers that I can ride a bike too as well…
Samo here. I’ll head back to NZ and do a little gold panning. An oz should be worth an arm and a leg by then.
The Freckle
" I am not an economist by any stretch, an investor and a builder"
Yep, keep it simple Jay, just get those deals over the line. By the way how your purchases in Atlanta going??I think this article pretty much sums up my feelings on this stuff.
http://danerwin.typepad.com/my_weblog/2011/02/ten-reasons-why-economists-get-it-wrong.html
Cheers
WI
http://www.wheredopuppiescomefrom.com.au/australian-puppy-mills/Since we are speaking of economists….
The First Law of Economics…the only thing more dangerous then an economist is an amateur economist.
The Second Law of Economics…..the only thing more dangerous then an amateur economist is a professional economist.Remember…amateurs built the Arc….Professionals built the Titanic !!
worldinvestor wrote:" I am not an economist by any stretch, an investor and a builder"
Yep, keep it simple Jay, just get those deals over the line. By the way how your purchases in Atlanta going??I think this article pretty much sums up my feelings on this stuff.
http://danerwin.typepad.com/my_weblog/2011/02/ten-reasons-why-economists-get-it-wrong.html
Cheers
WI
http://www.wheredopuppiescomefrom.com.au/australian-puppy-mills/The article makes some valid points about the difficulties and complexities of financial predictions especially when in the context of defining time frames. He is however, patently wrong when he states that
They did not foresee the financial crash of the west, or the collapse of Western property values.
There where several notable financial experts and economists shouting from the roof tops about the impending crash. MSM ridiculed them along with pure lies from politicians and central banks.
Economics 101 is pretty easy WI. Spend more than you earn you go broke. Borrow more than you can afford to repay you go broke.
The global sovereign debt crises unfolding now is a result of those two principles. The only thing we can’t predict accurately is when they will go bust. It could unravel tomorrow or 5 years from now but my money is on sooner rather than later.
The Freckle
Texas Cash Cow Investments Australia wrote:Remember…amateurs built the Arc….Professionals built the Titanic !!Then I’ll go with the amateurs. The Arc never sunk and saved the world if you believe religious folklore.
The Freckle
For the investors on this site, would like an update on your area of interest and how things are going.Atlanta – I have not sourced a suitable property for 6 weeks now, very difficult to find something that provides the right return and criteria.
What aboutTexas
Florida
CarolinaWould be keen on an update, what is happening on the ground.
Cheers
WI
http://www.wheredopuppiescomefrom.com.au/australian-puppy-mills/Frekle,
I think your warnings have merrit however I think your just a little too doomsdayish…..
From my perspective we have come through the worse of it.
there is no question certain areas had massive problems
Phoenix for example had rental price compression in the multi family arena.. and thousands of investors walked away from their duplexes and four plexes… 4 plexes sold in the 2004 era for 350k were trading at 100k and can be bought today at 120 to 150k no problem
what was epidemic in Phoenix though was 2 fold,, Huge Mexican work force and population that lived in these units…. The AZ government decided to come down hard on illegals, so the undocumented workers were booted out or afraid and they left.. then the contstruction workers all got laid off, so you had a reverse migration for the first time in History back to mexico.. So vacanies were enormous. and rents went down substantially,,,
these are all just regional events… Would the same thing happen in Atlanta which is soup de jour right now with investors.. Not really work force is not so heavily waited to hispanics… Can rents go down because of over supply of houses YES.
although a lot of the big money is coming into ATL market right now buying apartments, and those boys are smarter than me and so they see trends or market pressure that will stabalize the multi family arena.
I know with our portfolio in Atl… we have had to lower rents on a few houses to get them rented… what we thought we could get 950 for rented at 895.00 that type of thing…Can that house go to 500..00 any thing is possible but highly unlikly as thats the starting point for garden apartments.. And many apartments are as much if not more than the single family homes,
Gas prices have an impact in a market like GA… as its so spread out and commutes can be long and expensive.Those buying the lower end of the market in GA could definalty get stung as there is a lot of newer inventory,,, One needs to have really good product…
My last trip to GA my partner and I drove through some neighborhoods, were he pointed out houses that investors have tought a year ago and never rented, Ya you could buy them cheap but at the end of the day what do you have.
Hanju,
You sent me a PM on this site but your not accepting e mails…
if you would like to contact me personally you may do so at my company e mail
freckle
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/04/10/BUET1O0RN2.DTL
With all the foriegners paying cash, and now US companies paying cash.. Our economy is at less risk going forward.
with the Foriegners and US IRA's all paying cash for properties,,,, the foreclosure mess will be a thing of the past.
I have commented on this before….
Even if you have a melt down of some degree… And say your properties rent went from 900 to 500.00 a month… your still positive geared or close too it…. since you have no debt…
Now if your borrowing money in OZ at 7 to 8% to buy US properties and expecting 15% return nets for the long haul I think there is a chink in that armour… However those that are truely paying cash are in no risk of losing their investments… just will not make the returns they were making in years past.
WI, has been commenting on this lately,,, the ship might have sailed for someone of his disipline that will not chase deals and has a set goal in mind…The good news is those that bought at the bottom might have a true exit quicker than they expected.
there is no where else in the US that I am aware of ( except ft. Meyers florida and other parts of florida) were you can buy houses that are as new as What WI and others have been buying for the price they paid for them over the last 18 months.. And then rent for what they rent for. this is what has driven the ATL market…and it created the herd mentality
You can buy older homes in other markets…
Or newer homes however they cost more than what has been enjoyed in ATL the last 12 months.
I know with our portfolio in Atl… we have had to lower rents on a few houses to get them rented… what we thought we could get 950 for rented at 895.00 that type of thing…Can that house go to 500..00 any thing is possible but highly unlikly as thats the starting point for garden apartments.. And many apartments are as much if not more than the single family homes.
Jay
Interesting about the rents in Atlanta, all my properties have rented out within 1-2 weeks of rehab and achieved higher rental return than was quoted, the last property took 1 day. Don't know whether I have just been lucky, but I would like to think it has something to do with the quality of the subdivision and the rehab.The 1 month rent to property management company for finding a tenant is not nice, but I do like the late fees, 10% of the monthly rent.
Any new purchases in Henry County??
WI
http://www.wheredopuppiescomefrom.com.au/australian-puppy-mills/
How is HenWI
bought 3 this month,, all sold to my US investors for our TWH model IE they bought the debt instrument and are the bank now on our deals with equity . And I have 4 short sales I am working probably get 2 of those…
I think I posted on here that I bid on 15 non performing notes. None of those houses I would keep. I am going to flip them all to low end investors, IE investors looking for 20 to 25k properties. Not our thing in AtL. Or any where else for that matter. Buying non performing Notes is a skill in its self we will have some BK's , cash for keys and simple foreclosures.. Asking price for the package was right at 10k per note,, I will bid half…
We have 27 homes in our Atlanta market since last Sept, I do not think I rented one of them in less than 30 days.
We are very selective though and it usually takes 2 to 4 applications before we pick a tenant. All in all rents have been at what we thought they would rent for or a little less, nothing higher than we projected.
Of course we do not pay any placement fee or management fee and all rehab and repairs are done at true cost no mark up.
Its just amazing to me I was making hard money loans on these same assets in 07 at 90K to 120k per home and now buying them back at 30 to 40k PLUS Rehab…
On another subject,,,,,, We are looking heavily at Blueberries here in Oregon,,, the Korens are sold on the health benefits.
There is huge tax deductions to be had, plus returns in the 15 to 20% or higher range… Not sure if you Aussies can take tax deductions from US farming operations if so it could be something you want to check out.
I will put an analysis together and post a web site where you can take a look.
I am hearing Frekle loud and clear and trying to diversify,,, Timber, Blueberries, Corn maze, Pumpkin Cannons, Zip Line tours. I have all of these going,, On the 500 acre tree farm we own I just got that approved for a Canopy tour zip line operation… biggest one in the northwest….. I did one in costa rica and thought crap we have this 500 acres with nice topo,,,,90 minutes from downtown Portland,,, we are excited,,, I brought in an operator to run it.. as I know nothing about it. other than I think its going to print US dollars.
JLH
wrote:Its nice there for sure, but its country living for sure… have to drive 90 minutes for SushiNow there’s something you never have to deal with in my line of work!
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
Ziv
Once your out of the major cities in the US.. and probably like most places, food becomes very regionalized.
Portland is a great food town, many top chefs will leave San Francisco or LA to come to Portland B/C they can start their own Resturant, where in those towns the start up is near impossible.
Rural Oregon dining choices are still just greasy spoons…. Its logging country and farmers…..
where in the south rural cusine is great BBQ and Soul food…. We get canned beans and bagged lettuce
JLH
I'm interested in the truffles and the sea perch.
Its just amazing to me I was making hard money loans on these same assets in 07 at 90K to 120k per home and now buying them back at 30 to 40k PLUS Rehab
Jay
Helllllo.. I live in the world of Oz we are paying $400K per property entry level, properties in Atlanta ….. $30-30K yep….I am loading up.
Jay you have what I call Titanic Syndrom.
When the Titanic hit no one really panicked after all it was unsinkable right! Even as it settled into the water still people were reluctant to get in life boats. The first launch of boats were only half full. People still believed all was well until almost an hour before the end.
Debt’s going stratosperic. How do you manage debt being accumulated at exponential rates
No trade surpluses at all!!
The core of the problem. Spending more than one earns.
Have a look at the 2007/08 periods in those graphs. You could almost say the economy was relatively normal (if that’s the right word).
We fell in a hole then and that was bad enough. Look at the economic picture now.
And everyones in on the QE party
If QE was a pathway to wealth we would have done it millennia ago but we all know that sustained QE to solve a debt problem is economic suicide.
Weimar Germany, Zimbabwe are prime examples of what happens when you try this. QE is a delaying tactic for politicians. It’s not a solution.
If you think it’ll be business as usual after the next GFC you’re in for a big shock.
The Freckle
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