- John-USA-CommercialRE wrote:You make yourself out to be such an authority on everywhere in the world..
If there's anything that you find in my comments to be inaccurate as it relates to fact please let me know and I'll duly correct it(them). If you disagree with my opinion please persuade me otherwise. If you disagree with my assumptions or conclusions please provide supporting evidence or logical argument and I will take it on board for consideration.
Well I agree with you Freckle on a few fronts. Mainly, "the better things to do"….
But I do think the most intelligent thing (fact) you have ever mentioned is that There are opportunities to invest in any asset class in any market at any time. I could not agree with you more.
As far as me being the up-side guy; well I have to weigh both the benefits and the risk as I consult every buyer, seller, owner and client that comes my way. I evaluate risk every day in the real estate industry as other economic drivers that impact my industry. But I am that guy (regardless of what title you give it) that looks for the opportunity within any up or down cycle of the real estate market and seek to capitalize on such opportunity as well as coach and assist my clients into the same. Though there will always be risk in any investment arena be it Florida or elsewhere I do try to educate myself and my clients as completely as possible to make the wisest decision in investing. Any yes I do benefit as I do not like working for free and my services add value regardless of my relationship. Now; off to better things…
John-USA-CommercialRE
Email MeI would be interested to know how much in property those spruiking the US have actually purchased since the economy 'stabilised' just after the GFC.
I was there last month, and out of habit took a look at the property market in different spots around California (to be fair, not the areas discussed above). Regardless, the US economy is far from giving me fuzzy good feelings. I currently wouldn't touch that market as an investor from Australia. If makes a great hedge for the high aussie dollar, then again, I could just transfer the money over and sit it safely in a high interest bank acount in the states.
You would have to know the US market quite intimately to mitigate the risks there, and to do that, you would have to live there and make a living (perhaps one like selling US property to Australians who don't really understand the market over there).
As for talking up Section 8 tenancy, the government may pull the plug on that subsidy in the near future, and there doesn't seem to be tenant insurance over there.
Rob I could go along with what you say if you could articulate something.. anything.. that would enlighten us as to Florida's situation.
Meanwhile Florida's state of distress appears to be escalating in spite of all the hopium. For the life of me I can't see how anyone could recommend Florida as an opportunity to an inexperienced overseas investor with concomitant exchange risk and still sleep at night.
From Zillow
This is an interactive map. Go to their site and mouse over each county for foreclosure detail
Florida Defies Housing Rebound as Foreclosures Soar
By Dan Levy – Jan 18, 2013 12:53 AM GMT+0800
Florida’s foreclosure crisis just won’t end. More than six years after subprime lending and overbuilding led to the worst U.S. real estate slump, the state had the biggest increase in home seizures last year, and the highest foreclosure rate, RealtyTrac Inc. said.
One in every 32 Florida households received a notice of default, auction or repossession in 2012, more than double the average U.S. rate of one in 72, the Irvine, California-based data seller said today in a report. Home repossessions increased by 16,276 during the year to 84,456, the biggest gain nationwide. Adding to the state’s woes is a backlog of foreclosures caused by a required court review of each case.
January 28, 2013
By RealtyTrac Staff
Foreclosure Activity Down in 12 of 20 Largest Metros, Led by Phoenix, San Francisco, Detroit
Stockton Posts Highest Metro Rate, But Florida Cities Account for 8 of Top 20 Rates
Now if you think all these hedge funds and companies entering the market and driving up prices is good and that it mops up excess capacity.. well think again.
Is the “Buy to Rent” Party Over?
- Rents for single-family homes are rising slower than property prices as firms such as Blackstone Group LP (BX) flood the market with homes for lease, posing risks to investors betting billions on the burgeoning market.
- In Atlanta, asking prices climbed 14 percent as single family rents gained 0.5 percent, and in Las Vegas rents dropped 1.7 percent even as asking prices soared 18 percent.
- “Investors are buying homes, in part, to rent them out, and that has added a lot of rental supply, and that’s preventing rents from rising,”
- Tina Africk, a Las Vegas broker who manages 60 single- family home rentals, said houses that might have rented in 30 days in the past can now take 60 to 90 days to fill, while rents have dropped about $100 a month from a year ago.
- “One of the risks is prices run up and therefore the rental economics don’t justify the business model,” Rahmani, who has an outperform rating on Silver Bay and Colony, Rahmani said in a telephone interview from New York. “The problem could be that you would have assets that are up a lot in value, which isn’t the worst thing in the world. The risk would be that everybody goes to sell at the same time.”
The major risk aspect of these markets are that they are bubbles fueled by Fed money via corporate/hedge funds looking for yield. As the price rises yield evaporates. Once that nexus is reached you'll start to see sell offs as funds look for better yield. First to sell will make money after that everyone's a potential looser. This will be driven by declining rents as more and more properties enter the market looking for tenants. Hedge fund investors are currently struggling with occupancy rates of 54% on average.
Most small investors will have paid too much and become caught in the rent squeeze. The small investor will have to compete for management services as the big guys monopolise resources. When the selling starts prices will revert if not outright crash. The foreclosure cycle will start all over again.
You're going to have to be a very astute, agile investor with your finger glued to the pulse to have any hope of making a buck out of this market over the long haul. In normal times returns are in the 6-8% bracket for low to no risk. In this market risk is everywhere. You will need 3 – 4 times that return as reasonable compensation. If you can't get 20%+ net yield it's just not worth being there.
ten_burner wrote:If your investing in the US these days it is predominately a cash-flow play. Yes there will one day be CG but, I would not focus orspend a lot of time attempting to pick when that will be.
Thank god for the voice of reason. And not just in the US, anywhere in the world. On the upside, there are sooooooo many great cashflow deals in so many countries because of the flocks of speculators who ignore them and buy "that super-duper-prime-location minus 5% negatively geared but hey wait for that growth to hit". More and more of these buyers every year, in spite of everything, all leveraged to the gills – causing bubbles and mini bubbles to burst again and again and economies to take more and more hits – and producing even more great cashflow buys year after year. Personally, I'm loving it.
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
Personally I have never liked section 8 tenants because they are Federal they are very pro tenant. Frankly the rental market is strong you don't need section 8 houses. Frankly because finance is now available you should look at better quality property. That's why I like apartment complexes they offer a good return and I think that you will get capital growth as the economy recovers.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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