Post deleted by Mat Sklansky

[ArturiusX]

Probably the biggest flaw I can see is that you're using the 'real estate bubble' as a general, all encompassing aura. I'd say its a geographical one thats prominent in certain areas, rather then others. Breaking down by city isn't even enough; sometimes you need to go into a street by street comparison in order to find a good entry point.

One of the problems you'll run into is the same reason why most good macro predictor pundits aren't rich; because transforming a solid macro understanding into a money making idea is extremely difficult. If I were you, I'd start by developing a more solid micro philosophy on house, try and find certain areas where you may be able to find real estate 'arbitrage', work on becoming an expert in that niche, and use your macro knowledge to ensure you're not blind sided by a semitrailer when you make this investment.

[ArturiusX]

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".

[RikaKazak]

[ QUOTE ]
Probably the biggest flaw I can see is that you're using the 'real estate bubble' as a general, all encompassing aura. I'd say its a geographical one thats prominent in certain areas, rather then others. Breaking down by city isn't even enough; sometimes you need to go into a street by street comparison in order to find a good entry point.

One of the problems you'll run into is the same reason why most good macro predictor pundits aren't rich; because transforming a solid macro understanding into a money making idea is extremely difficult. If I were you, I'd start by developing a more solid micro philosophy on house, try and find certain areas where you may be able to find real estate 'arbitrage', work on becoming an expert in that niche, and use your macro knowledge to ensure you're not blind sided by a semitrailer when you make this investment.

[/ QUOTE ]


WOW...very well put

For the record, my general investing area still hasn't even stopped GOING HIGHER!!!!

You could of bought a house 3 years ago if you wanted...you'd just of had to be more selective about where you bought (and possibly moved/changed states etc. don't know your personal life so that might not of been possible)

U.S. macro = bad [img]/images/graemlins/frown.gif[/img]

U.S. micro = more bad then good, but PLENTY of good left

[RikaKazak]

[ QUOTE ]
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".

[/ QUOTE ]

WOW...you're the man

nice posts

[stephenNUTS]

Finding any market bottom is one of the hardest things to attempt,if not next to IMPOSSIBLE to succed at

In the stock market ABC stock falls from $120 down to $90..down to $65..etc(obv. I am using an extreme example,and in this market it is ringing true)...but fundamentally the companies fundamentals,business model,industry product/demand,balance sheet financials,future outlook,etc...are still strong with no excuses to the drop,except following the WHOLE market direction down in general at the moment.Obviously keeping an eye out for any changes that can suddenly appear,and adjustments like any investment are ness

Ask Warren Buffet...he's done pretty good buying bargain basement stocks,where I GUARANTEE you he did not pick the exact entry bottom 50% of the time

These have made for the BEST buying opps in history IMO!


Now with regard to Real Estate:

Your in the market to buy a house the last 2 yrs ..and have seen houses drop from $650k...to $575...now down to the "firesale" price of $499..whatever

If you do your homework/research the area,demographics,job market,are looking at a long term 5+ years viewpoint,house for sale inventory/to sell ratio,etc.you can find absolute STEALS that just might not be there the next few years

In real estate as long as you are take a low-interest FIXED rate low fee 1st mortgage,and plan to live their as a primary residence,I think you wont regret it 10 yrs from now,...and thats the same if you buy that ABC stock with the same conviction and long term view

IMHO...I would rather be purchasing RE now over Stocks anyway with the shape the Stock Market looks right now ,without hesitation

The biggest flaw most new investors(and ALL bad ones) do...is they TRY and wait for markets to eventually find its exact bottom and be heros(No ONE knows when that is).

They then miss the boat and pay 25%+ more for a property/stock....AFTER EVERYONE dips their toe in the water first,then chase them an the upswing ala. the 2000 NAZ rise/bust and now the recent 1998-2006 parabolic R/E rise..then look back and say woulda' coulda' shoulda'

The ole'buy LOW sell HIGH is an age old adage that still works quite well.

Timing markets however...is a tough game

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

*** I have some younger friends who I BEGGED to start buying RE after 9-11 when rates fell to all-time lows a few years back...but they waited until late 2005-06 to buy and are kicking themselves now with an overpriced house,a larger BS adjustable mortgage and very low equity,and a HORRIBLE sellers market to liquidate if forced to [img]/images/graemlins/frown.gif[/img]

[DesertCat]

<i>*** I have some younger friends who I BEGGED to start buying RE after 9-11 when rates fell to all-time lows a few years back...</i>

Why would you recommend buying real estate when interest rates are at all time lows? Since real estate values have an inverse relation to interest rates, isn't that the riskiest time to buy?

BTW, I thought this article in Fortune was pretty good. Check out the tables for the details on their price to rent macro analysis.

[ QUOTE ]
According to our calculations, prices in most markets will fall by double digits over the next five years.

[/ QUOTE ]

But if you read the chart, some markets aren't overvalued at all, including Detroit and Cleveland. Since each market is made up of thousands of thousands of homes, even if the average home in a market is over-valued, that doesn't mean they all are (but bargains may be real hard to find). Use the same benchmark, price to est. rental income, to give you an idea of whether any individual house is a good deal or not.

[stephenNUTS]

[ QUOTE ]
<i>*** I have some younger friends who I BEGGED to start buying RE after 9-11 when rates fell to all-time lows a few years back...</i>

Why would you recommend buying real estate when interest rates are at all time lows? Since real estate values have an inverse relation to interest rates, isn't that the riskiest time to buy?

BTW, I thought this article in Fortune was pretty good. Check out the tables for the details on their price to rent macro analysis.

[ QUOTE ]
According to our calculations, prices in most markets will fall by double digits over the next five years.

[/ QUOTE ]

But if you read the chart, some markets aren't overvalued at all, including Detroit and Cleveland. Since each market is made up of thousands of thousands of homes, even if the average home in a market is over-valued, that doesn't mean they all are (but bargains may be real hard to find). Use the same benchmark, price to est. rental income, to give you an idea of whether any individual house is a good deal or not.

[/ QUOTE ]

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

I NEVER thought it would explode upward,that eventually culminated in this sub-prime/housing mess we are in now.But if you bought back then with a coventional mortage and continue to hold or live in this said home ...the chances of you being in this mess are ZILCH

So I was talking about buying YEARS ago before the parabolic rise in R/E....not in 2006!

I dont understnd what your getting at,and am confused at what your saying or the time frame involved?

SF [img]/images/graemlins/confused.gif[/img]

**I would say I gave them some pretty good advice ,as I also made some of my most profitable purchases and sales during this boom as well

[Mark1808]

[ QUOTE ]
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".

[/ QUOTE ]

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.