GLOBAL
REAL ESTATE MARKETS FORUM
4Rs:
Realty Reality
Recommended Reading
with
Editorial Comment
Bubble
Trouble - Real estate will make
you rich, eh? If everyone thinks so,
how can it be true?
by
Amy Feldman with Adrienne Carter, Jonah Feedman
and Sara Max @ CNN.com
September 20,
2004
See:
link
EDITOR'S
COMMENTS
by Ole Bear
How I made $100 in real estate...
This is a joint effort, multiple authored essay, and in our view a good read about all the hype we see on Bubblevision about how to make $100 in real estate. I think it absolutely hilarious that the Texas oil services exec [now retired] pulled all of his money out of the Ponzi Shell Game called Wall Street and put it into real estate. Well, if he paid cash for all his realty "investments' -- ok. However, we suspect, as most of the hucksters and PT Barnum look a-likes generally encourage the use of maximum leverage [aka, financing the property up to your gullet!], that this Texas investment club guru has more debt that Carters has pills. Recent histories of the real estate booms and busts in the Texas market alone over the past 30-40 years probably aren't being taught in these so-called investment clubs.
In the 1920s, even elevator boys were talking about and buying stocks on Wall Street. Now we have janitors and teenagers talking the hype of making $100 in real estate. History may not repeat itself exactly, but the propensity for self-replicating the DNA and RNA do go on quite well according to Watson and Crick [the two gurus who discovered the DNA double helix]. Some of the late night TV ads on how to take my seminar and get rich in real estate are a real hoot. There's always several somewhat normal looking "beautiful people" popped on the idiot box telling you how much they have made and what their monthly cash flow is. None of these folks will tell the viewers how much their assets are in hock to the fractional reserve banking cartel, and that their assets would be in the poor house if they couldn't sell or rent their so-called marvelous investments.
There's two ways to make money in real estate. Rental cash flow over and above the mortgage and expenses, and buying low and selling high. On Wall Street it is called dividends and profits. Financing real estate is like playing the stock market game on margin in our view in the current economic environment. Both play to the Greater Fool Theory.
There are a lot of great caveats in this co-Authored essay on the real estate investment club. We advise not playing with real estate on margin unless the investor has a very protected cash basis or cash flow from a lease to a very strong credit tenant. If one wants to play in real estate on a cash only basis, taking the banking cartel out of the loop, the investor most likely can weather any financial storm if they are looking at a long term holding period. However, in a general real estate downturn, marketing time and realized price for said realty may singe the hairs on the investor's chinny, chin, chin. That's usually the time the smart folks like Sir Warren of Buffett [Sage or Oracle of Omaha] step up to the plate and buy stuff for pennies on the dollar -- which is how the real money is made in real estate.
Ole Bear, Editor
© 2004 Realty Reality
