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Seriously? You want to get into real estate in the middle of the biggest depression we have ever seen? When property values are still way over-inflated? This

Seriously? You want to get into real estate in the middle of the biggest depression we have ever seen? When property values are still way over-inflated? This is only the start of the article's problems. The next thing he advocates is putting 20% down on a $6.5 million apartment complex, effectively leveraging 5 to 1. Leverage has no place in any retirement account, period! This entire article is a recipe for disaster.

malloreon 16y ago
Flippant reply: I'd rather buy during a depression than during a boom.
someone_here 16y ago
You could invest in Canada. Property values have been stable.
- heycarsten 16y ago
  http://www.greaterfool.ca/2010/08/24/market-update-6 http://www.greaterfool.ca/2010/08/24/market-update-6 (Granted, Garth Turner is extreme, but he does not make things up.)
- hugh3 16y ago
  Currencies, on the other hand, have not. If you shift your $1 million USD across to Canadian dollars, and the Canadian/US exchange rate returns to its historical norm, then you can (effectively) lose 30% of your money quite rapidly, assuming USD is what you typically spend.
ryanwaggoner 16y ago
"Be fearful when others are greedy and greedy when others are fearful." ~Warren Buffett Do you have any personal experience with multifamily real estate? It's valued based on the income stream, so unless the income stream is inflated, it's not really overvalued. And increasing population + more single-member households + fewer people buying houses now = more renters. Where the hell do you think all the people losing their homes right now are going to live? Avoidance of the kind of knee-jerk reaction that you're espousing is what makes good real estate investors incredibly wealthy. The leverage thing I'm more willing to concede, but the numbers aren't terribly different if you just buy the property outright. And let's be honest: this isn't a true "retirement account".
- rphlx 16y ago
  > more single-member households Do you have a source for this? I think the number of single-member households is actually declining in most parts of the US. People move in together to reduce costs during a recession. College grads moving back in with their parents, 2 imigrant families share a 2BR apt, etc.
- illumin8 16y ago
  Yeah, I know Buffett said that but there's a reason why nobody is buying homes right now- they are still way overpriced historically compared to incomes. Anyone that tells you property never loses value is probably an RE shill or makes money somehow off the industry.
matwood 16y ago
>Seriously? You want to get into real estate in the middle of the biggest depression we have ever seen? When property values are still way over-inflated? Depends. In general when everyone is panic selling you want to be buying. Obviously you never want to be buying crap (bad stocks, bad property, bad anything), but the panic times open up great opportunities for those with cooler heads. Looking specifically at property many people still need places to live, but again it comes down to good versus bad. Should I invest in an apartment complex out in the middle of the desert, probably not. If I find a good deal on a complex in a city near a college, now we're talking. Rates are currently low and a lot of people are being forced into selling which makes many prices low. You can also look at the financials of a rental property and value it much easier than say a residential house. Examining a rental property is much closer to examining a business than pricing residential. Now, the above ignores the work that goes into owning rental properties. Depending on the income level your property targets you may end up spending a full day in court every month throwing people out. Does the owner of the property have the stones to throw out a mother and her kids because they don't pay? Then you have repairs and other complaints. You can get a company to handle most of this, but that does cut into your profit.
ww520 16y ago
Right now is actually a very good time to go into real estate investment. The price has dropped. The market is in fear. Interest rate is unbelievably low. The economy has somewhat bottomed out.

malloreon 16y ago

Flippant reply: I'd rather buy during a depression than during a boom.

someone_here 16y ago

You could invest in Canada. Property values have been stable.

heycarsten 16y ago
http://www.greaterfool.ca/2010/08/24/market-update-6 http://www.greaterfool.ca/2010/08/24/market-update-6 (Granted, Garth Turner is extreme, but he does not make things up.)
hugh3 16y ago
Currencies, on the other hand, have not. If you shift your $1 million USD across to Canadian dollars, and the Canadian/US exchange rate returns to its historical norm, then you can (effectively) lose 30% of your money quite rapidly, assuming USD is what you typically spend.

ryanwaggoner 16y ago

"Be fearful when others are greedy and greedy when others are fearful." ~Warren Buffett Do you have any personal experience with multifamily real estate? It's valued based on the income stream, so unless the income stream is inflated, it's not really overvalued. And increasing population + more single-member households + fewer people buying houses now = more renters. Where the hell do you think all the people losing their homes right now are going to live? Avoidance of the kind of knee-jerk reaction that you're espousing is what makes good real estate investors incredibly wealthy. The leverage thing I'm more willing to concede, but the numbers aren't terribly different if you just buy the property outright. And let's be honest: this isn't a true "retirement account".

rphlx 16y ago
> more single-member households Do you have a source for this? I think the number of single-member households is actually declining in most parts of the US. People move in together to reduce costs during a recession. College grads moving back in with their parents, 2 imigrant families share a 2BR apt, etc.
illumin8 16y ago
Yeah, I know Buffett said that but there's a reason why nobody is buying homes right now- they are still way overpriced historically compared to incomes. Anyone that tells you property never loses value is probably an RE shill or makes money somehow off the industry.

matwood 16y ago

>Seriously? You want to get into real estate in the middle of the biggest depression we have ever seen? When property values are still way over-inflated? Depends. In general when everyone is panic selling you want to be buying. Obviously you never want to be buying crap (bad stocks, bad property, bad anything), but the panic times open up great opportunities for those with cooler heads. Looking specifically at property many people still need places to live, but again it comes down to good versus bad. Should I invest in an apartment complex out in the middle of the desert, probably not. If I find a good deal on a complex in a city near a college, now we're talking. Rates are currently low and a lot of people are being forced into selling which makes many prices low. You can also look at the financials of a rental property and value it much easier than say a residential house. Examining a rental property is much closer to examining a business than pricing residential. Now, the above ignores the work that goes into owning rental properties. Depending on the income level your property targets you may end up spending a full day in court every month throwing people out. Does the owner of the property have the stones to throw out a mother and her kids because they don't pay? Then you have repairs and other complaints. You can get a company to handle most of this, but that does cut into your profit.

ww520 16y ago

Right now is actually a very good time to go into real estate investment. The price has dropped. The market is in fear. Interest rate is unbelievably low. The economy has somewhat bottomed out.