I am starting to think I should sell - My TV!

[joeiannuzzi]

Hello fellow REIN members. I am seriously considering selling and here is why:
1) Oil closes over $90/barrel for West Texas Intermediate on Oct 25, 2007

2) Encana posts a 3[sup]rd[/sup] quarter profit of just under a billion dollars

3) This Royalty Review story which is being propagated by the Investment Antichrist (i.e. the media) creates terror in the mindset of television viewers.

99% of the coverage is going to point #3 and that is why I am considering selling my television set!!

 

[marcp]

Had me going there Joe !

Haven`t watched my TV for more than 2 hours in the last six months (honest), I should sell too!

BTW, I think oil is at $92 this morning.

 

[CalvinPeters]

Oil hits record above $92 on weak dollar, Nigeria
Reuters
October 26, 2007
NEW YORK (Reuters) - Oil prices shot to an all-time high above $92 a barrel on Friday as the tumbling dollar and Nigerian output disruptions helped extend a rally that has lifted prices nearly 30 percent since August.


I think the buck is at 1.04 today. Life sucks. lets all jump together. haha.

 

[bluerockgroup]

Yep..just like lemmings, we should all head for the cliffs and try to fly!

-Grant

 

[viklund]

QUOTE (bluerockgroup @ Oct 26 2007, 08:24 PM) Yep..just like lemmings, we should all head for the cliffs and try to fly!

-Grant

Too Funny!! I was just poking around looking for a doomsday report for dropping house prices. Your post was not exactly what I was looking for Joe.

But it was a good belly laugh thanks.

Where would Russ or Don have hid that fancy little scare-tactic? I`m looking for the headline that screams REAL ESTATE PRICES TO DROP 50%. Can you point me in the right direction?

Nat

 

[marcp]

Hopefully that headline shows up in the Calgary Sun!

 

[viklund]

QUOTE (marcp @ Oct 27 2007, 09:57 PM) Hopefully that headline shows up in the Calgary Sun!

Ha-ha ... I hope it shows up too. I`d love to attach that report to a few offers I`ve been eyeing. If you find a headline like that, let me know

 

[timk519]

QUOTE (viklund @ Oct 27 2007, 11:28 PM) Too Funny!! I was just poking around looking for a doomsday report for dropping house prices. Your post was not exactly what I was looking for Joe. But it was a good belly laugh thanks.Where would Russ or Don have hid that fancy little scare-tactic? I`m looking for the headline that screams REAL ESTATE PRICES TO DROP 50%. Can you point me in the right direction? You may not find them up here - yet. But home prices are dropping in the States, and in some cases builders are walking away from partially-completed projects, or trying to get rid of inventory using auctions. So now you`ve got some US property owners seeing houses identical to what they just purchased being offered at a price starting $200K - $300K less than what they`d just paid.

For a Canadian data point, here`s an odd property I just ran across in Grimsby Ontario - a brand new, 7K sqft, 46 acre property, will be sold unfinished for $650K. ?!? I`m not sure what the story is here, but in my time surfing MLS ads I`ve no recollection of a property this size going for this price before. Is this the canary in the coal mine, or just an isolated case of an individual building beyond their financial resources?

So, the real question is if there`s something going on south of the border which`ll eventually affect CDN RE prices such that it`s better to get out now while prices are substantially higher now than they would be later.

If a person had a report about falling home prices in their hands now, chances are other buyers would too, it`d be too late to get out with their profits intact, and then who would the lemming be? So let`s not laugh too hard at what I`m sure is a serious question every RE investor should be asking and getting an answer using the fundamentals.

 

[housingrental]

A great post Timk519. I`m not too concerned about canadian prices dropping anytime soon but it could happen and isn`t this supposed to be the place to discuss it? Certainly there will be many specific Canadian real estate markets that will fall in price in the next few years. The possibility of worsening economic fundamentals and more financing restrictions could be an issue for Ontario realestate 2 years from now.

I`m not familiar with Grimsby valuations but that property is being sold unfinished and the cost to build just the unfinished structure should be well under 650k. I don`t think this indicative of much. In the higher end of market I`ve also seen many places sell years later for less than their building costs even in up markets.

QUOTE (timk519 @ Oct 28 2007, 09:41 AM) You may not find them up here - yet. But home prices are dropping in the States, and in some cases builders are walking away from partially-completed projects, or trying to get rid of inventory using auctions. So now you`ve got some US property owners seeing houses identical to what they just purchased being offered at a price starting $200K - $300K less than what they`d just paid.

For a Canadian data point, here`s an odd property I just ran across in Grimsby Ontario - a brand new, 7K sqft, 46 acre property, will be sold unfinished for $650K. ?!? I`m not sure what the story is here, but in my time surfing MLS ads I`ve no recollection of a property this size going for this price before. Is this the canary in the coal mine, or just an isolated case of an individual building beyond their financial resources?

So, the real question is if there`s something going on south of the border which`ll eventually affect CDN RE prices such that it`s better to get out now while prices are substantially higher now than they would be later.

If a person had a report about falling home prices in their hands now, chances are other buyers would too, it`d be too late to get out with their profits intact, and then who would the lemming be? So let`s not laugh too hard at what I`m sure is a serious question every RE investor should be asking and getting an answer using the fundamentals.

 

[DonCampbell]

Joe,

Once again you caught us off guard with your observations. What a GREAT post! I wonder which "scary monster" that will come around next to provide us our next buying opportunity!

Keep up the great work

 

[mcgregok]

Like all investing don`t put all your investment monies in one thing. A lot on good folks in 1980 lost all they had when the real estate market went down in Calgary. Nobody saw it comming.
Although I don`t believe the market is going down to far it has already gone down about $40,000 on the average in Edmonton and Calgary. It will take some time to regain these lost profits.
When REIN started sometime around 1993 I went to a meeting and they (Tim Johnston) were telling us we would have an uptrending market until 2010-2011. This is only a few years off.

 

[DonCampbell]

QUOTE (mcgregok @ Oct 28 2007, 09:22 AM) Like all investing don`t put all your investment monies in one thing. A lot on good folks in 1980 lost all they had when the real estate market went down in Calgary. Nobody saw it comming.
Although I don`t believe the market is going down to far it has already gone down about $40,000 on the average in Edmonton and Calgary. It will take some time to regain these lost profits.
When REIN started sometime around 1993 I went to a meeting and they (Tim Johnston) were telling us we would have an uptrending market until 2010-2011. This is only a few years off.

Yes, and at that meeting I`m sure you will remember that we went through the economic fundamentals of the day and said that we would all be watching the fundamentals to keep REIN Members updated as the world shifts. I`m sure you`ve witnessed that the world`s economies, oil prices, in-migration, average incomes, Kyoto, Rent Controls, Canadian Dollar increases, Wars in Iraq etc (all major changes that have occured since 1993. Very important to look at the fundamentals on an ongoing basis as things change in the world or an investor could be left behind basing their decisions on old data. Is everything going to be a straight line upwards... of course not.

Hense the reason that the Goldmine Scorecard was developed so EVERYONE could quite easily analyze the economics (even without an economics background). Trust you are using it to make sure that you are staying on top of the market shifts.

Warren Buffet said `put all your eggs in one basket then WATCH that basket carefully.` Diversification can lead to below average results. Diversification has been copmpared to getting a one goal lead, having the best scorers in the league but still deciding to play defense to `protect` your lead rather than continue doing what got you there (offense). We all know what happends in most of those cases.

We`ll keep developing the tools so people can do their own investigations because you should never, ever just blindly follow someone else`s recommendations (except maybe Joe Iannuzzi`s recommendation of selling his television

) At the last few REIN Workshops (and last weekend`s big Quickstart we provided everyone with the latest research and trends and identified area that the fundamentals aren`t so strong, despite the current hot trends.

As long term investors we aren`t selling so we not phased by `average prices down` numbers, in fact we get excited because the market has been WAY too hot and now properties are `on sale.`

You may enjoy our latest research into the Pine Beetle issue in BC and the Transportation updates in Calgary. (you can find them on this forum using the quick search button on the top left of this page). Keep on top of the markets and they will take care of you, respond to the markets and they will `eat your lunch.`

Hope to see you at one of our upcoming research events.

 

[timk519]

QUOTE (housingrental @ Oct 28 2007, 12:16 PM) A great post Timk519. I`m not too concerned about canadian prices dropping anytime soon but it could happen and isn`t this supposed to be the place to discuss it? Certainly there will be many specific Canadian real estate markets that will fall in price in the next few years. The possibility of worsening economic fundamentals and more financing restrictions could be an issue for Ontario realestate 2 years from now. Do you think it`ll take 2 years for the subprime meltdown, a US recession, and higher CDN $ to affect the CDN RE market? We`re seeing manufacturing hurting right now, and with it loss of jobs. Warren Buffet`s been I`m not familiar with Grimsby valuations but that property is being sold unfinished and the cost to build just the unfinished structure should be well under 650k. I don`t think this indicative of much. In the higher end of market I`ve also seen many places sell years later for less than their building costs even in up markets. Ok, thanks for your insight on this. I was a bit surprised when I saw this - but as a mental exercise I wondered if a structure like this be made to work? If it was split into 3 units, you`d have a triplex w/2,000 sq ft units.

 

[joeiannuzzi]

Joe

Once again you caught us off guard with your observations. What a GREAT post! I wonder which "scary monster" that will come around next to provide us our next buying opportunity!

Keep up the great work


Thanks Don! In the spirit of full disclosure, anyone wishing to make an offer needs to know that they can take immediate possession of the TV, I will accept 40% below fair market value for the item and it has been used for property porn purposes (i.e. watching "Flip This House")

 

[Thomas Beyer]

To sell or not to sell .. always our biggest question !!

Other places than Alberta exist on the planet ! Alberta certanly has upside .. but prices are quite high already .. compared to Munich or Zurich or Madrid or the US or SK or ON !! look at ongoing cash-flow, affordability and upside, and better places emerge .. especially in US dollars ! You can get a house now in Houston, TX for around $100,000 or in Florida or in Atlanta, GA .. and those might be worth 50% more in a few years .. will Alberta houses be higher by 50% 5 years from now ?

Yes, we had a great run here in Alberta over the last 10 years .. and we don`t sell many properties either as they all cash-flow with great rental upside .. but don`t assume this goes up in a straight line forever ! Don`t get caught in a negative cash-flow property in the hopes for offsetting, huge future equity upside.

Thomas Beyer, Platinum REIN member, TEL: 403-678-3330 [email protected] or www.prestprop.com

 

[joeiannuzzi]

Always have an exit strategy before you make an investment. Also, review it on a regular basis to make sure it is in keeping with your personal Belize. That is one of the characteristics that separates REIN members from the masses who obtain their investment advice from the media and friends at the water cooler.

Investing is a journey, not an event!

 

[housingrental]

A voice of reason!

The future is always uncertain and the economic fundamentals can change suddenly that your basing your future purchase and hopes of increases in rental income and appreciation. Experts very often can`t predict markets with accuracy, be it real estate, corn, or currency.

Getting into a property that is cash flow positive from the start (or can be based on the current market with renovations/modifications/marketing) and having material additional cash to draw from if needed should be the first two priorities when determining a purchase. Reading through posts on this site I`m somehwhat baffled by the lack of fear - hopefully its just internet boasting because fear can be a good thing - when things go wrong and your levaraged you can wipe out not only your real estate portfolio but the rest of your funds.


QUOTE (thomasbeyer2000 @ Oct 28 2007, 09:55 PM) To sell or not to sell .. always our biggest question !!

Other places than Alberta exist on the planet ! Alberta certanly has upside .. but prices are quite high already .. compared to Munich or Zurich or Madrid or the US or SK or ON !! look at ongoing cash-flow, affordability and upside, and better places emerge .. especially in US dollars ! You can get a house now in Houston, TX for around $100,000 or in Florida or in Atlanta, GA .. and those might be worth 50% more in a few years .. will Alberta houses be higher by 50% 5 years from now ?

Yes, we had a great run here in Alberta over the last 10 years .. and we don`t sell many properties either as they all cash-flow with great rental upside .. but don`t assume this goes up in a straight line forever ! Don`t get caught in a negative cash-flow property in the hopes for offsetting, huge future equity upside.

Thomas Beyer, Platinum REIN member, TEL: 403-678-3330 [email protected] or www.prestprop.com

 

[housingrental]

I`m not sure is a good answer - be it on timing, where, or if - just making note that there are many ways the future will play out.

Re 650 000 building - look at it this was large apartment, even if bought for cheap, is a liability not an asset if you can`t consisently rent it. Check out the commercial investor tomorrow and flip through to some of the less populated towns in Ontario - you can find lots of interesting things like 20 000 sq. ft. apartment buildings for under a million, or even 500 000 - with who knows how much differed maintenance and in towns with population declines.


QUOTE (timk519 @ Oct 28 2007, 04:35 PM) Do you think it`ll take 2 years for the subprime meltdown, a US recession, and higher CDN $ to affect the CDN RE market? We`re seeing manufacturing hurting right now, and with it loss of jobs. Warren Buffet`s been quoted that it`ll take about 2 years for the sub-prime mess to get cleaned up but in the meantime there`s going to be a lot of hurt spread around, so the question is how much of that hurt`s headed north, and where will it be concentrated?

Ok, thanks for your insight on this. I was a bit surprised when I saw this - but as a mental exercise I wondered if a structure like this be made to work? If it was split into 3 units, you`d have a triplex w/2,000 sq ft units.

 

[Thomas Beyer]

QUOTE (housingrental @ Oct 28 2007, 09:40 PM) A voice of reason!

... Reading through posts on this site I`m somehwhat baffled by the lack of fear - ...


Where do you sense lack of fear ?

 

[housingrental]

I didn`t mean in your post - others though - I consider purchasing cash flow negative properties becuase of hopes of future appreciated and rent increases as reckless - Fear of losing money should guide every investment decision. (note I`m assuming current cash flow negative is because market rents don`t allow for cash flow, not rents that are below market level) -

QUOTE (thomasbeyer2000 @ Oct 29 2007, 11:38 AM) Where do you sense lack of fear ?