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I'm worried about the real estate market right now

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WJK

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I'm worried right now about what is going to happen in our real estate markets in the immedate future. There are some segments that may be, or are, in troublesome.

Several segments in the commercial market are stressed. Properties used for retail sales, the mall properties, and the office space market are having huge problems with vacancies, loan & rental defaults and potential foreclosures. These problems were already trends that have been blown up with the lock-downs due to the virus.

Another market that is suffering is people who have Airbnb rentals and vacation rental properties. I received an email from Airbnb today that they are planning to go public. They are adjusting their rules. Again. In the meantime, there are many people who built mini empires based upon Airbnb rentals. The stories usually involve people taking on massive debts, long term leases, and/or making heavy investment to create short term rental income streams. I was reading yesterday about people who can't pay their rent or payments on many of these properties.They are unsuccessfully trying to sell the properties or hang on.

(As I was reading about their Airbnb woes, I thought about how these investor's business model is similar to people who built e-businesses on other people's platforms. It's a pretty slippery slope for the long haul. I was feeling grateful that I only have a couple of sleeping rooms & summer RV spaces listed with that platform. My life is not dependent on the income from them.)

Another market that is starting to show some stress cracks is the multi-family residential market (apartments). Over the last few years the watch words have been OPM (oher people's money). That is a business model using as much debt as possible to buy as many units as possible. I have friends who have refinanced the minute that they had any equity in their buildings. They would use the loan proceeds to go buy more residential units. The problem with this type of agressive investing is that these loans are commercial loans that are subject to different rules compared to single-family homes and small residential unit (2 - 4 units). If the market value of these apartment buildings drops, the bank can call for the owner to pay down these loans to bring them into conformance. And those rules can tighten as the market retracts. (I remember when those loan calls happened to a lot of people around 1990 and they ended up losing their properties.)

So, I'm going to be sitting on the sidelines to wait and see what happens -- no new investments. If the real estate market starts to slide, it normal leaves no man standing. It cascades throughout the different RE segments one after another. If the dominos start falling, cash will be king. Sure, I may miss out on a few deals while hold my cards close to my chest. That's OK. I will survive to invest another day.
 

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WJK

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There will be a flood of foreclosures hitting the auctions around next summer once eviction moratoriums are lifted and the backlog of foreclosures comes through the pipeline.

I don't want to invest in much real estate. I believe it's too efficient of a market
Explain what you mean by "too efficient of a market". I understand, but it probably a new concept for a lot of people.
 

Johnny boy

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Explain what you mean by "too efficient of a market". I understand, but it probably a new concept for a lot of people.
Everybody knows about it. It's too expensive to be overlooked. It lacks creativity and there are too many restraints. All of these things come together to drastically limit your upside.

I own a service business. My employee costs $17 an hour. I sell his work for what equates to roughly $170 an hour. I will never buy a house and then immediately sell it for 10 times what it's worth. If you do then you have found the deal of a lifetime. I am not out here looking for the deal of a lifetime. I'm looking for a deal I can make every single day, and at a giant return.

When I say it is too efficient, I mean that the competition in the marketplace has ensured that there is little profit (in my opinion). For people who lack the ability to grow a business, or don't want to run a business, and are comfortable with only making a few million dollars, I would suggest real estate.

For those that want to build something that brings in exponentially larger returns, with arguably less work, in a more scalable way, I suggest a business. Even when it comes to passive investments. (passive investments won't return an exponentially larger return but an active business will)

For example, before I ever become a landlord, I will start a classic car leasing company. I can expect to receive a passive 15+% return backed by assets. All because I chose to be in a less efficient market and add some value instead of doing what hundreds of thousands of other people are doing (or trying to do) in real estate.

a little off topic but just my opinion. ^
 

Kid

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I think commercial RE is bubble forming (or already formed).
I can't count how many buildings were built in past 5 years around place i live
that supposed to be office-for-rent type buildings.

In hindsight it's pretty obvious - anything that promises easy and safe profits
will become bubble.
It's slightly educated guess but there is big surplus of investors cash and they build wherever is land is available.
Since residential market bubble burst is still fresh in investors minds, they invest in commercial.
 

KeepGoin

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I was looking at real estate the other day. There are a couple interesting factors I found. The supply is around 3.6 months for new constructions(the standard is 6 months) so demand is incredibly high.

The median household income has also reached a historical high for Americans accounting for inflation. It usually hovered around 55k and it’s up to 60ish in 2020. And homes are selling for just about as high as they reached before the last crash.

im not quite sure what to think of it all, but something has to give eventually.
 

WJK

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I was looking at real estate the other day. There are a couple interesting factors I found. The supply is around 3.6 months for new constructions(the standard is 6 months) so demand is incredibly high.

The median household income has also reached a historical high for Americans accounting for inflation. It usually hovered around 55k and it’s up to 60ish in 2020. And homes are selling for just about as high as they reached before the last crash.

im not quite sure what to think of it all, but something has to give eventually.
In what segment of the market?
 

WJK

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Everybody knows about it. It's too expensive to be overlooked. It lacks creativity and there are too many restraints. All of these things come together to drastically limit your upside.

I own a service business. My employee costs $17 an hour. I sell his work for what equates to roughly $170 an hour. I will never buy a house and then immediately sell it for 10 times what it's worth. If you do then you have found the deal of a lifetime. I am not out here looking for the deal of a lifetime. I'm looking for a deal I can make every single day, and at a giant return.

When I say it is too efficient, I mean that the competition in the marketplace has ensured that there is little profit (in my opinion). For people who lack the ability to grow a business, or don't want to run a business, and are comfortable with only making a few million dollars, I would suggest real estate.

For those that want to build something that brings in exponentially larger returns, with arguably less work, in a more scalable way, I suggest a business. Even when it comes to passive investments. (passive investments won't return an exponentially larger return but an active business will)

For example, before I ever become a landlord, I will start a classic car leasing company. I can expect to receive a passive 15+% return backed by assets. All because I chose to be in a less efficient market and add some value instead of doing what hundreds of thousands of other people are doing (or trying to do) in real estate.

a little off topic but just my opinion. ^
An efficient market is one where the varies are already factored into the price of that asset. You're right. The RE market is a lot more efficient than your business.
 

Silverfox148

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All players in the current commercial(large, medium, small) that are in trouble are hoping for a government bailout as that is the only thing that can save them at this point.
 

WJK

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All players in the current commercial(large, medium, small) that are in trouble are hoping for a government bailout as that is the only thing that can save them at this point.
It was the same for the investors in the mid-1970s, around 1980, at the beginning of the 1990s, and again in 2008. Playing the game has risks, seen and unseen. It's cyclic. No, the government doesn't bail out investors. These disasters, regardless of who is at fault, are part of the game. It's up to the investor to become better at his craft.
 

Joshuatree

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Nov 10, 2020
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Everybody knows about it. It's too expensive to be overlooked. It lacks creativity and there are too many restraints. All of these things come together to drastically limit your upside.

I own a service business. My employee costs $17 an hour. I sell his work for what equates to roughly $170 an hour. I will never buy a house and then immediately sell it for 10 times what it's worth. If you do then you have found the deal of a lifetime. I am not out here looking for the deal of a lifetime. I'm looking for a deal I can make every single day, and at a giant return.

When I say it is too efficient, I mean that the competition in the marketplace has ensured that there is little profit (in my opinion). For people who lack the ability to grow a business, or don't want to run a business, and are comfortable with only making a few million dollars, I would suggest real estate.

For those that want to build something that brings in exponentially larger returns, with arguably less work, in a more scalable way, I suggest a business. Even when it comes to passive investments. (passive investments won't return an exponentially larger return but an active business will)

For example, before I ever become a landlord, I will start a classic car leasing company. I can expect to receive a passive 15+% return backed by assets. All because I chose to be in a less efficient market and add some value instead of doing what hundreds of thousands of other people are doing (or trying to do) in real estate.

a little off topic but just my opinion. ^
Johnny Boy, I would be interested in talking to you about what you are doing right now to automate your businesses? I am a commercial real estate investor and broker, I own several commercial buildings in different states. The COC (cash on Cash) returns I have seen in the past are in the range of 10-20% backed by an asset that matures in equity over time. Real estate has been a great investment for me. I hear what you are saying about ROI and agree with you that achieving a 10x immediate return is mostly only going to happen in a Service model that you can leverage online. An asset like real estate will likely have a cap based inflation for growth and return. This is the beauty of online that you are talking about. If you are able to create a good foundation for people to work and provide a service to others and you provide value and people see the value in your service the upside is pretty limitless. I still believe that you should consider Real estate as a great way to have your money work for you. I mean you have to live somewhere right? Even owning a house that you live in can outweigh renting. For example, if you can find a duplex or fourplex to purchase or a place with a separate unit, then live in one unit renting out the other units, supplementing your mortgage from the other paying units. Now in this situation, you have just created passive income or at the very least eliminate the largest monthly expense any person has (RENT/MORTGAGE). The wealthy have several levels of income, real estate is a large portion of many successful people. I implore you to reevaluate this market for a viable investment platform. Example: With the team for sale, in 2000 philanthropist Woody Johnson whose grandfather, Robert Wood Johnson II, expanded Johnson & Johnson. Johnson was unknown among the other NFL owners at the time of his $635 million purchase of the Jets franchise. Today the Jets franchise is worth more than $3.55 Billion dollars. It's not quite the 10x marker but it's a pretty damn good investment. That value is largely based on the Real Estate. Look at Gary Vee one of the biggest doing it online, even he wants to own the Jets. I finish by saying this; having a diverse portfolio is the way to hedge all markets.
 

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WJK

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I think commercial RE is bubble forming (or already formed).
I can't count how many buildings were built in past 5 years around place i live
that supposed to be office-for-rent type buildings.

In hindsight it's pretty obvious - anything that promises easy and safe profits
will become bubble.
It's slightly educated guess but there is big surplus of investors cash and they build wherever is land is available.
Since residential market bubble burst is still fresh in investors minds, they invest in commercial.
Commercial RE used to be the holy grail in the business. Those who could afford to go into that market had the ticket to steady, rising income. And there were almost no management/maintenance problems for the investor, in many of the long term leases, which were executed with solid national tenants. (That was before the internet and on-line shopping.) Based upon that truism, the commercial markets were totally over-built during the 1990s with OPM (other people's money). Adding the recent virus lock-downs to the mix is tipping the scale toward a segment wide disaster.
 

WJK

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Johnny Boy, I would be interested in talking to you about what you are doing right now to automate your businesses? I am a commercial real estate investor and broker, I own several commercial buildings in different states. The COC (cash on Cash) returns I have seen in the past are in the range of 10-20% backed by an asset that matures in equity over time. Real estate has been a great investment for me. I hear what you are saying about ROI and agree with you that achieving a 10x immediate return is mostly only going to happen in a Service model that you can leverage online. An asset like real estate will likely have a cap based inflation for growth and return. This is the beauty of online that you are talking about. If you are able to create a good foundation for people to work and provide a service to others and you provide value and people see the value in your service the upside is pretty limitless. I still believe that you should consider Real estate as a great way to have your money work for you. I mean you have to live somewhere right? Even owning a house that you live in can outweigh renting. For example, if you can find a duplex or fourplex to purchase or a place with a separate unit, then live in one unit renting out the other units, supplementing your mortgage from the other paying units. Now in this situation, you have just created passive income or at the very least eliminate the largest monthly expense any person has (RENT/MORTGAGE). The wealthy have several levels of income, real estate is a large portion of many successful people. I implore you to reevaluate this market for a viable investment platform. Example: With the team for sale, in 2000 philanthropist Woody Johnson whose grandfather, Robert Wood Johnson II, expanded Johnson & Johnson. Johnson was unknown among the other NFL owners at the time of his $635 million purchase of the Jets franchise. Today the Jets franchise is worth more than $3.55 Billion dollars. It's not quite the 10x marker but it's a pretty damn good investment. That value is largely based on the Real Estate. Look at Gary Vee one of the biggest doing it online, even he wants to own the Jets. I finish by saying this having a diverse portfolio is the way to edge all markets.
You are talking about different levels of risk and management involvement. You're right. It takes a good mix to make a good portfolio. Thinking about that, I should check my stock price today on my higher risk venture...
 

Silverfox148

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It was the same for the investors in the mid-1970s, around 1980, at the beginning of the 1990s, and again in 2008. Playing the game has risks, seen and unseen. It's cyclic. No, the government doesn't bail out investors. These disasters, regardless of who is at fault, are part of the game. It's up to the investor to become better at his craft.

I agree , but when it comes down to it that's the bet most of these investors are currently making who are staying in, investment wise you can see the commercial sector is massively overbuilt long term, Covid has just thrown fuel on the fire that was really already burning.

I personally don't know whether the government will bail them out or how, but I suspect it will.
I am predicting a massive bailout ala the financial bail out in 2008 but economy wide, yes some sacrificial lambs will be shown but I suspect this bubble is not going to pop just yet.
 

WJK

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I agree , but when it comes down to it that's the bet most of these investors are currently making who are staying in, investment wise you can see the commercial sector is massively overbuilt long term, Covid has just thrown fuel on the fire that was really already burning.

I personally don't know whether the government will bail them out or how, but I suspect it will.
I am predicting a massive bailout ala the financial bail out in 2008 but economy wide, yes some sacrificial lambs will be shown but I suspect this bubble is not going to pop just yet.
Yes. And here's a good example. In Los Angeles, around 1990, we had a total meltdown in the office market and in the warehouse market. That's where it started and it took down everybody else -- including the whole Savings and Loan industry. It was the start of personal computers.

My ex worked for a major oil company. (Yes, I was a trophy wife.) His office was in their downtown towers. I was in RE. That oil company sold its twin towers to a Japanese investor group. They were occupying 48 floors in those buildings. They built a new office building on the wrong side of the freeway. There they occupied 2 floors. They fired all of the secretaries, receptionists, and admin. assistants. They gave everyone a voice mail account and a PC. They had to make an appointment for office time. Everyone worked remotely.

That trend cascaded through the whole office market. We had "see-through" buildings -- totally vacant office high rise buildings that had been 100% occupied before the PC. That trend crashed all segments of the office space market.

And then, the PC brought about on-time deliveries. The warehouse segment of the RE market crashed. Everyone had previously had 60 days of inventory on hand. Suddenly, they had 3 to 5 days of inventory. No one needed their big warehouses anymore -- gobs of vacant space.

Our mantra in RE was "Stay alive until 1995." We figure it would take 5 years for the market to recover. Then the apartment and residential markets went south. Friends lost their entire portfolios.

1995 came and went with no relief. It took the rest of that decade to absorb the excess inventory.

After playing in the RE market for 44+ years, I'm really head-shy about this moment!
 

Kid

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Didn't know that it's repeat of history rather than something new!

Based upon that truism, the commercial markets were totally over-built during the 1990s with OPM (other people's money). Adding the recent virus lock-downs to the mix is tipping the scale toward a segment wide disaster
I brought this topic while casually chatting with my father's boss, once.
He concluded akin to "so there are no safe businesses".
By his voice tone and calm look on his face , one could tell that it wasn't a first time he thought about it.
 

WJK

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Didn't know that it's repeat of history rather than something new!


I brought this topic while casually chatting with my father's boss, once.
He concluded akin to "so there are no safe businesses".
By his voice tone and calm look on his face , one could tell that it wasn't a first time he thought about it.
Been there. Done that. Have the T-shirt and my ticket stub. This is continuing cycle...
 

Joshuatree

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Commercial RE used to be the holy grail in the business. Those who could afford to go into that market had the ticket to steady, rising income. And there were almost no management/maintenance problems for the investor, in many of the long term leases, which were executed with solid national tenants. (That was before the internet and on-line shopping.) Based upon that truism, the commercial markets were totally over-built during the 1990s with OPM (other people's money). Adding the recent virus lock-downs to the mix is tipping the scale toward a segment wide disaster.
I hear what you are saying but you are glazing over what happened in 2007,08,09. Many properties were captured at rock bottom prices. Because of this low entry fee for many owners they are able to create a better stable property even in times of low rents. Commercial Real estate is about building wealth with OPM. And now because of the internet, small mom and pop investors have an opportunity to now invest in larger commercial real estate deals, when before it was more coveted for the accredited investors. Everything is cycle-based.
 

WJK

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I hear what you are saying but you are glazing over what happened in 2007,08,09. Many properties were captured at rock bottom prices. Because of this low entry fee for many owners they are able to create a better stable property even in times of low rents. Commercial Real estate is about building wealth with OPM. And now because of the internet, small mom and pop investors have an opportunity to now invest in larger commercial real estate deals, when before it was more coveted for the accredited investors. Everything is cycle-based.
EXCEPT, this time there is a disruption in the cash flows from an oversupply of commercial properties and a long term reduction in the number of tenants for that class of property. I'm not "glazing over" any of the cycles. I've lived through several of them. What I am saying is there is a fundamental change in the basic structure of our society. How can we, for what purpose, and at what cost are we going to convert these commercial properties to other uses? The only reason to buy property is to create income streams or to personally use it. What good is a "big deal" where the property is sitting vacant and has no chance of being rented or occupied soon? It becomes a rock around your neck rather than an asset.
 

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WJK

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not everything is as sad as you say, of course, over the past year the real estate market has shrunk - especially during quarantine, no new houses were built at all - but as for me it's time to invest in houses in Miami - warm - sun - sea - good weather, that's what always will be in vogue. You need to invest now while everything falls and for the quarantine - since the quarantine will end soon and you will only be in the black
Yes, the residential markets in many areas have held up... so far... And the problems that I detailed are not "sad". They are part of a cycle noting changes in people's lifestyles.

The retail space market has gone through a lot of changes. In the 1960s, downtown areas were challenged by the shopping malls. Downtown areas became ghost towns. Then, by the end of the century, the mall fell out of vogue. They started to struggle and the emphasis went to neighborhood strip centers and downtown areas started to be revived. Now, with online shopping and the virus, all parts of the retail space commercial markets are in trouble.

The office market, especially in big cities, is another one to watch. The virus has shown people that they can work remotely. Many companies are rethinking their need for office space. The idea of corporate space down-sizing has many further implications. It's already starting to cause downward rent slides in the residential properties markets. People are moving out of the cities and opting for less expensive housing in smaller communities. Fewer people in an area means that commercial properties in the area have a declining demand. Less demand for space in the cities means lower RE incomes -- resulting in lower RE values across the board -- which translates into a smaller tax base in areas that have the heaviest tax burdens. The longer that the lock-downs lasts, the more entrenched these trends will become.

Like a wise man said, "The only thing that you can count on in life is change." Watching the changes in the different RE markets is the mark of a prudent investor.
 

Kid

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People are moving out of the cities and opting for less expensive housing in smaller communities.
Heard radio interview with re agent, who said exactly same thing, recently.
Basically, for price of rather small property in center of the city one can buy new, 2-3 times bigger house, one driving hour from the city.
Ofc, if someone wants something 3 times cheaper instead of 3 times bigger then there are no obstacles.

Covid made living in the city basically unbearable for many.
Additionally, people who will buy or have bought such houses recently won't come back right away.
They probably stay there till they'll pay off mortgage before they'll consider moving back to city.
 
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Johnny boy

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Johnny Boy, I would be interested in talking to you about what you are doing right now to automate your businesses? I am a commercial real estate investor and broker, I own several commercial buildings in different states. The COC (cash on Cash) returns I have seen in the past are in the range of 10-20% backed by an asset that matures in equity over time. Real estate has been a great investment for me. I hear what you are saying about ROI and agree with you that achieving a 10x immediate return is mostly only going to happen in a Service model that you can leverage online. An asset like real estate will likely have a cap based inflation for growth and return. This is the beauty of online that you are talking about. If you are able to create a good foundation for people to work and provide a service to others and you provide value and people see the value in your service the upside is pretty limitless. I still believe that you should consider Real estate as a great way to have your money work for you. I mean you have to live somewhere right? Even owning a house that you live in can outweigh renting. For example, if you can find a duplex or fourplex to purchase or a place with a separate unit, then live in one unit renting out the other units, supplementing your mortgage from the other paying units. Now in this situation, you have just created passive income or at the very least eliminate the largest monthly expense any person has (RENT/MORTGAGE). The wealthy have several levels of income, real estate is a large portion of many successful people. I implore you to reevaluate this market for a viable investment platform. Example: With the team for sale, in 2000 philanthropist Woody Johnson whose grandfather, Robert Wood Johnson II, expanded Johnson & Johnson. Johnson was unknown among the other NFL owners at the time of his $635 million purchase of the Jets franchise. Today the Jets franchise is worth more than $3.55 Billion dollars. It's not quite the 10x marker but it's a pretty damn good investment. That value is largely based on the Real Estate. Look at Gary Vee one of the biggest doing it online, even he wants to own the Jets. I finish by saying this; having a diverse portfolio is the way to hedge all markets.
My opinion:
I am not wealthy enough to hedge myself. People with "diversified portfolios" with under 50 million in the bank are pussies

I don't own because if I'm still stuck in the same house for more than 3 years my life is growing to slowly. Last year was 1900 a month for my place. This year it's 3200. In a few years I'll be living in Medina but I'm not going to purchase a home. The only property I'm buying will be for the business. My landlord thinks he's a genius. I think he's a moron. He's twice my age and has to listen to me complain about how the dishwasher is making a noise. That's no way to live. If I had his amount of equity/net worth/access to capital I would be doubling my money every year with a business, not getting little puny rent payments. And I am doubling my money. We're twice as big as before and will be twice as big next year.

Supplementing a mortgage or rent payment: I told my girlfriend to get a job or start a business. Brings in another 3k a month that I put towards rent and food.

The business automation is 1. You get a recurring client that pays monthly with autopayments. 2. You hire other people to do the work. (For location-dependant business only: 3. You build a great single location and then franchise it) There's gonna be management issues, little problems here and there, etc. It's not fully automated by any means. It certainly beats having a job though.
 

WJK

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My opinion:
I am not wealthy enough to hedge myself. People with "diversified portfolios" with under 50 million in the bank are pussies

I don't own because if I'm still stuck in the same house for more than 3 years my life is growing to slowly. Last year was 1900 a month for my place. This year it's 3200. In a few years I'll be living in Medina but I'm not going to purchase a home. The only property I'm buying will be for the business. My landlord thinks he's a genius. I think he's a moron. He's twice my age and has to listen to me complain about how the dishwasher is making a noise. That's no way to live. If I had his amount of equity/net worth/access to capital I would be doubling my money every year with a business, not getting little puny rent payments. And I am doubling my money. We're twice as big as before and will be twice as big next year.

Supplementing a mortgage or rent payment: I told my girlfriend to get a job or start a business. Brings in another 3k a month that I put towards rent and food.

The business automation is 1. You get a recurring client that pays monthly with autopayments. 2. You hire other people to do the work. (For location-dependant business only: 3. You build a great single location and then franchise it) There's gonna be management issues, little problems here and there, etc. It's not fully automated by any means. It certainly beats having a job though.
I understand your business model. I hear your comments about your landlord. Best of luck with your plans.
 

EvanOkanagan

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The Residential market where I live is unreal right now (a few hours out of Vancouver, Canada).

I’m a realtor so I’ve always got my finger on the pulse. The prices have never been higher than they are now. 4-5 months ago, I was looking at listing my house, and figured I would list for $775k and likely get around 750k at the end of the day...

The market started getting hotter.. we love our house so weren’t eager to just let it go, but if we got the right price then yeah.

I tested it out on a realtor networking group a month ago at 800k... lots of interest. Then I put it up to 825k.. still decent interest.

We decided, what the hell, let’s throw it on for 850k and if it doesn’t sell, we still love living there.. and it’ll probably shake out around 825k.

Goes live on the MLS, and in two days we have 25 showings. 3 offers and the top offer is also unconditional (cash offer and no inspection needed.. on a 1970 house). We just sold for $865k. Over 100k more than I thought we could get around the summer time.

Could the market go up anymore? It’s still super hot where I live but I don’t see this growth as sustainable...
 

mon_fi

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275
Brussels
I didn't read the entire thread, but here's my take on RE.

1. RE is overvalued in many different markets due to the ridiculously low interest rate ongoing since 2008. However, this is not enough to create a bubble. To have one, actual demand should be lower than estimated demand. The question we should be asking is therefore: will people need more space, or less in the future?

One way to look at this is to look at the demographic pyramid (and immigration number). As long as a country's population is growing, RE is a sure investment. If you have more and more people, you will need more and more homes.

Since the West is about to have much less people than it was used to, RE is doomed to lose value over the really long-term (50 years or so).

The second way to look at it is the Internet: if the online trend perseveres, it is obvious that there will be fewer need for commercial RE.

2. Not everything is overvalued because not everything has the same demand: it all depends on the location. There will be places that will always have demand (city centers of student cities), just like there will be places whose demand depends on trends, economic growth, etc.


3. I hardly see how RE can be a fastlane strategy. To me, it's similar to the stock market: you invest in it once you became rich, not to become rich, unless you decide to contract a mountain of debt. But even then, you'd better buy a small company and grow it instead of investing into RE. RE is slow to repay itself because let's be honest, it's pretty chilled. You don't do much besides owning the place.

When you rent out a house for 4, it will always be a house for 4. However you manage it, you can't scale the value of your asset.


4. RE is not efficient AT ALL.

In Belgium, you can buy RE in some places for a price approximately 40% lower than in Brussels, and subsequently rent it out to students at a price approximately 20% lower than you would in Brussels, so the ROI is much better than in Brussels. It's been like that for 6-7 years now.

In Bruges, prices per sq/m are 3x what they are in Brussels, and yet, the rent is..50% cheaper. Go figure this out.

I actually think RE is the least efficient of all markets. When I look at prices, it always seems undervalued, or overvalued.

Oil is efficient. So efficient that when there is too much of it, producers will pay you to get it.
 

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