Post deleted by Mat Sklansky

[stephenNUTS]

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A friend of mine also made a good analogy.

"In golf, we always say, 'drive for show, putt for dough', because putting is where the real differentiation comes. In finance, 'macro analysis for show, micro for dough' is pretty accurate too".

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Although I agree with what you say about macro vs micro analysis, Warren Buffet has said he would rather have a bad manager in a good business then a good manager in a bad business. To me, this implies you at least want to be confident that the long term demographics of your investment look good. In Real Estate I don't think you want to try and time markets as you imply, I think you want to buy relatively good value in a good area (future growth prospects)with a debt structure that allows staying power. Buying cash flow cheap and getting positive cash flow has always made more sense to me then speculation on house appreciation with high leverage.

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Perfectly said..

~stephen [img]/images/graemlins/cool.gif[/img]

[ArturiusX]

The big thing with all this Warren Buffett talk (in a real estate thread, wtf?) and all these ideas and concepts, its all pretty useless.

Yep, you can talk about theory as much as you want, but to make money, you need to find real estate style arbitrage somewhere. There's suburbs in particular locations that are primed for growth because of X town planning factor, and it hasn't been moved into price. Download all the government statistics you can find, and mull over them. Find that area where the pricing doesn't quite make sense. Find that area where a housing shortage could develop due to geographical limits. Find that area where no one would be looking to sell, giving off the illusion of low inventory.

There's a lot of books on this topic, but I'd stick to the real estate research books. Don't get the stupid "flip houses, make money" or "cash flow your way to easy property!", because their message is very basic and useless if you have half a brain. Instead, search for ones that may not be as flashy, but contain more raw information about trends, statistics, and different market anomalies.

[stephenNUTS]

[ QUOTE ]
The big thing with all this Warren Buffett talk (in a real estate thread, wtf?) and all these ideas and concepts, its all pretty useless.

Yep, you can talk about theory as much as you want, but to make money, you need to find real estate style arbitrage somewhere. There's suburbs in particular locations that are primed for growth because of X town planning factor, and it hasn't been moved into price. Download all the government statistics you can find, and mull over them. Find that area where the pricing doesn't quite make sense. Find that area where a housing shortage could develop due to geographical limits. Find that area where no one would be looking to sell, giving off the illusion of low inventory.

There's a lot of books on this topic, but I'd stick to the real estate research books. Don't get the stupid "flip houses, make money" or "cash flow your way to easy property!", because their message is very basic and useless if you have half a brain. Instead, search for ones that may not be as flashy, but contain more raw information about trends, statistics, and different market anomalies.

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Art,
I was just comparing WB's use of buying value in stocks...to buying/finding value in Real Estate.

But to say it is useless is as useless as comparing your comment :

Yep, you can talk about theory as much as you want, but to make money, you need to find real estate style arbitrage somewhere


WTF does that mean anyway(abitrage a real estate model?...lol),and do have ANY experience in what you are talking about except using big words?

No need for your usual GEEKazz response to me

I was trying to help the OP with his simple question....not get into anything more.

Gimme a [censored] break if I "mentioned" stocks in a real estate thread and insulted you for Christ sakes

This is why 2+2 has turned to chit,no matter what forum you try to help in.The anonymous posters can and always will hide behind their screenames regardless

Yeah.....OP just go buy a book as he says...lol...thats the answer

Geeeeez
GL,
Stephen Feraca

[ArturiusX]

Stephen, what are you talking about? Making money investing in housing takes skills well beyond the usual macro theory of housing. We can talk about buying bottoms, buying tops, when to buy, when to sell, all that [censored], but at the end of the day, your loot will be determined by your ability to negotiate, keep costs low, keep afloat using cash flow ideas, all that [censored].

Also, whats wrong with buying books about statistics? You can buy a motivation book disguised as a real estate book or you can get a book that helps you mull over data and give you ideas on trends.

Also, seriously, I can use a Warren Buffett analogy for anything in life. Warren Buffett ideas aren't the only ways to make money, so why cite him as some sort of be all end all?

[ArturiusX]

Also, I did not insult stock vs real estate comparisons.... once again, read posts, it helps avoid these misunderstandings.

[stephenNUTS]

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Stephen, what are you talking about? Making money investing in housing takes skills well beyond the usual macro theory of housing. We can talk about buying bottoms, buying tops, when to buy, when to sell, all that [censored], but at the end of the day, your loot will be determined by your ability to negotiate, keep costs low, keep afloat using cash flow ideas, all that [censored].

Also, whats wrong with buying books about statistics? You can buy a motivation book disguised as a real estate book or you can get a book that helps you mull over data and give you ideas on trends.

Also, seriously, I can use a Warren Buffett analogy for anything in life. Warren Buffett ideas aren't the only ways to make money, so why cite him as some sort of be all end all?

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Art,

You are 1000% correct about so many other variables when it comes to investing,but many of the admitted new/younger posters looking to buy/invest in their FIRST house or stock....have to start somewhere,and I am just tring to ease into some these complex subjects.

Overwhelming a beginner in any field with too much is IMO not helpful.So that is why I "try" and use simple comparison sometimes whether it be a question about W/S or R/E....in which I have almost 20+ yrs experience in which I would like to share with the members just starting out

A simple approach is usually a good start.The Warren Buffet comparison I made was to show that buying VALUE is imperative whether it be stock,real estate,a first time home,new business,whatever.

I am probably much older than most here(48...ugh [img]/images/graemlins/frown.gif[/img])...but also much more experienced in these two fields than most...and due to my OWN MISTAKES I am hoping for others to avoid ,or offer help in an arena I have learned from my own naive learning curve

I apologize if I flew off the handle,because as I have said a few times...this forum (BFI) is THE BEST bar none,on 2+2.It is NOT the usual confrontational know-it all from some 16yr old teenage punk as the other forums are festered with.

I have always read your posts with true respect,and have felt you are without a doubt a very bright and knowledgeable person

There have been some GREAT threads that I have tried my best to help...and threads (like the recent mobile home investment thread)that I find intriguing,and want to listen and learn myself

Lets just forget about and move on?

OK?

Stephen [img]/images/graemlins/cool.gif[/img]

[DesertCat]

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After the Sept.11,2001 disaster,as well as the stock market fall that followed due the economy being put in jeopardy...interest rates plummetted .

Returns were too low to keep money in CD/money market funds ,bond yields were tooo LOW,the transportation industry came to halt,hitting manufacturing hard,commodoties like GOLD-oil were flat,etc.

I also felt investing in stocks was extremely risky due to increassed terrorist/anthrax scares,amongst others at that particular time.(remember we fell too NEW lows on the Nasdaq after that I believe)

IMO buying a piece of property to live in at that time was as safe/cheap an investment as one could get,and use as well to live in as a primary residence

Some of "those houses" I reco'd to my friends to buy as first time buyers....have since tripled+ in the NY area(even with this recent slowdown).With interest rates that low...I felt the housing market would continue to expand

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Stephen, aren't you being a little results oriented? My point was that real estate value is directly and inversely related to interest rates. Lower interest rates makes real estate more valuable, higher makes it less valuable. So when interest rates are at record lows, you have to worry about rates reverting to their mean (going higher) and driving down the value of your real estate. One risk in todays market is that interest rates are still historically attractive. Were rates to increase another 1% that would be another body blow to RE prices.

Now it's not the only factor. Perhaps the ratio of rents to ownership costs was extremely attractive at the time you made your recommendation. But you implied you made a blanket recommendation on this one factor so I thought it curious that you used it as an opposite indicator of what I would.

And if anyone had bought the S&P 500 at it's lows in 2002, they'd have more than a double with dividends including. Commodities have also done pretty well too.

[ArturiusX]

Hey, no hard feelings Stephen. We're actually on the same side. I wrote on my blog about a week ago how value investing >>>> growth based investing, and I see no reason why it wouldn't apply to good old real estate either. Also, real estate arbritrage, which I admit is a stupid term, but I really can't think of another name for it and my buddies in real estate use it too, is just when pricing of a particular plot of land is lower then the statistical mean, with no good reason. I'll make an analogy for the 'dogs of the dow' style investing; you're looking for the 'dog suburbs of the city'. You're looking for the areas that have been underperforming in terms of price, but looking at the fundamentals and the quant stuff, it doesn't make sense. I think thats the best place to go making money in real estate, which is the same theory as 'value investing', except I prefer my term because value investing makes you sound like a family man who's trying to plan for retirements 30 years later... We're here to make above average returns consistently [img]/images/graemlins/cool.gif[/img]

Desertcat: Aren't interest rates a tax write off in America if you live in the home you purchased? how would this affect that sort of model?

[stephenNUTS]

Hello DesertCat,

I think you are mis-understanding my point with regard to my friends.I will try again..

At that time with what seemed like the world coming to an end after 9/11...I gave two of my close younger friends that had limited resources at the time this advice.

They had always asked me for my advice/input with regard to the Stock Market as that was my primary business

Real Estate/homebuilding was something I was always intrigued with and started when I was younger,and learned from the school of hard knocks beginning as a carpenter (my first job while going to school).

The biggest mistake was mainly due to being overleverged in the early 1990's real estate fall/slowdown,and seeing a few years of investing go up in smoke in real estate as well as after the 1987 stock market crash seeing the same

Even through that period....I still ALWAYS felt that the positives of owning a home vs. renting dwarfed the negatives

My being upset with their choice was...instead of just not buying at the time I reco'd(which I completely understood) was....then recklessly chasing the housing market UP at what I felt was at or near a top in 2006 feeling they didnt want to miss the boat,...taking out a high interest ARM mortgage(that they are getting smoked with),...and buying in a location that in NO way would support the price they paid if any dominoe effect started .They just had too many negative variables going for them.

Obviously I had or NEVER will know where any top or bottom is....but a reckless investment is bound to have problems

They did just that and are paying the consequense now in many ways.

Of course it sounds results orientated I guess ,but historically home ownership ....reaps the rewards of having a place to sleep,appreciation over years,tremendous tax benifits,and pretty much putting leveraged money to work quite effortlessly

Lets face it...from the rich to the average middle,or even lower income families...their real estate holdings/home is and always will probably be their greatest asset

I am in NO way trying to say this is a universal guaranteed no lose proposition....but I would recommend it to any first time young or old home buyer that does his homework/research.

Owning property over time...esp your own home, if done correctly is as safe a risk/reward as you can have as an investment IMO.

Stephen [img]/images/graemlins/cool.gif[/img]

[stephenNUTS]

Cool Art..

In fact your reference to:

"real estate arbritrage, which I admit is a stupid term",made me laugh...as it just reminded me of WS lingo

PM me your blog link if you dont want to post it here,as I would love to read it [img]/images/graemlins/cool.gif[/img]

Stephen