The What If Question

[UTCVenturesLtd]

That question has been on a few people`s minds. Could we be at the threshold of a new Great Depression? What does one do as an investor to be prepared for the worst? What if the banks take a "bank holiday"? What if the system falls apart? There are a good number of people out there buying and holding gold and silver, putting cash under their mattresses and keeping their basements well stocked with canned goods on the extreme side.

I still see mega projects going on out there. Surely those in the know would halt work if they knew there was something coming down the pipe. Companies still have their projections and plans and seem to turn a blind eye to the hype out there. With the slowdown in the east, there seems to be a new inmigration to find work in Alberta.

There appears to be a major cycle that takes place. A boom or inflation and a bust or deflation. The only difference this time is a few big U.S. banks got taken down. Investors can make money in both scenerios. Ride the stock market up, and short the market on the way down. Buy properties and ride the boom and sell as the buyers start to dry up, wait for the market to level off to buy again. If the property cash flows, you can always hold for the long term. With stocks, we all know that we should buy low and sell high. Actually, people buy high hoping that it will go higher. People run from stocks that are low. That is like going to the store in a way and seeing your favorite pudding on sale for 50% off and not stocking up thinking that the price will go lower when it actually ends up going back to the reg. price and maybe even with a price increase and you miss the boat. Bottom line for investing is that you have to be right more than 50% of the time and you will make money!


There seems to be a supply and demand cycle. Everything produced, wears out eventually so consumers will have to replace the items. Prices drop to where the consumer can afford to purchase and then the next cycle begins. It is where things get overheated that the danger seems to lie. What goes up like a rocket, comes down like a missle. With real estate, i do not see prices coming down to where the run started but somewhere from where they started really taking off to where they peaked out at. The general trend has been always "up" over the long haul.

I think that U.S. property is grossly undervalued. If the U.S. govt has those printing presses for money running 24/7 now trying to fix the money system, the real estate should be worth a LOT more. Inflation should be running rampant, but that doesn`t seem to be happening.

Anyone out there with a good economics background who can figure out the system? Why is it that the experts disagree with each other? The extent of what is going on is always left as a mystery.

 

[Thomas Beyer]

QUOTE (UTCVenturesLtd @ Oct 11 2008, 11:20 AM)
I think that U.S. property is grossly undervalued.




Some are .. but many are not .. what is a shopping centre worth were 30% of tenants will go bankrupt, including the 2 lead anchor tenants and most retailers revenue has dropped 40% ?



In Maui I saw some awesome houses, but still well above construction cost .. are they undervalued @ 3.7M ?



We wrote 4 offers last week, 3 on US multi-family assets .. about 10% below what we would have usually paid .. and guess what: none where taken .. in all 3 situations someone else bid more ! SO, the marekt is NOT falling apart in rental properties !!



More here: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-7504-America_and_Canada_is_addicted_to_credit.html

 

[kanabel]

[quote name=`UTCVenturesLtd` date=`Oct 11 2008, 11:20 AM` post=`38066`]
That question has been on a few people`s minds. Could we be at the threshold of a new Great Depression? What does one do as an investor to be prepared for the worst? What if the banks take a "bank holiday"? What if the system falls apart? There are a good number of people out there buying and holding gold and silver, putting cash under their mattresses and keeping their basements well stocked with canned goods on the extreme side.

I don`t believe it will be of that catastrophic proportions, but what is happening now might not be that "accidental" and "outta control". I just came across some movie last night that influenced my view on banking, cycles, economy, and who`s in control actually. What is happening right now is exactly what the movie shows. It`s called "Zeitgeist", and part III is about US Federal Reserves. Some of you have probably seen it, but if you didn`t I would strongly recommend it. You have it on YouTube.
Just another angle.
Cheers
Dejan

 

[housingrental]

http://www.publiceye.org/conspire/flaherty...al_Reserve.html

Provides a different, accurate perspective

 

[nzztz1]

QUOTE (housingrental @ Oct 12 2008, 02:03 PM) http://www.publiceye.org/conspire/flaherty...al_Reserve.html

Provides a different, accurate perspective

The reality is different. The entire system failed miserably. IMO

The situation have been compared to the 1929s when the counterfeiting of money created the huge depression. We are now faced with the same counterfeiting but this time electronically done by people we thought we could trust. A transaction is the equivalence of money. Balance between these transactions and the amount of money available in the system were not maintained under the law--greed. Loop holes in the way commerce was conducted because of computer technologies were being exploited between transactions. Leveraging is killing us. The banks and commercial institutions leveraged more than 10 times since the Clinton days and now have done so as much as 50 times real worth recently--100 times for Fannie. We were creating this black hole that was getting bigger and bigger with time. Could not have continued--don`t expect it. Some thing must give. bam pop

Our culture needs to change back to where we spend what we have and not what we do not have. We need to stop buying stuff with money we WILL work for. We are selling things we do not have. We sold metals (gold) or equity stock in the market with the expectation that we can buy it back cheaper as the price drops a few days later ( to beat the system) and this should balance things. Money is exchanged, but no product was ever delivered by the institute. We have no visibility as to what were real materials sold and what were IOUs-- privacy protection within the institutions. Reality - -how could the institution sell some thing that was never there you might ask- this is malevolent, and is at its essence, simple fraud. The System allows this to happen. The laws preventing this from happening were put in place but were not upheld. The SEC has no Beees to do anything. Pretty soon the hole opens wider and it crashes. We have a ton of credit and IOUs and NO materials. The banks sold gold and silver than the country/world did not have. This is what is causing the imbalance in the systems today. The entire market in the US cannot be liquidated- Debt to Value ratio is over a hundred percent. And the world knows it. What will happen with the US dollars once this is over, will be on peoples minds in a long time to come.

A lot of people were invested in Fannie and Freddy- all of their life`s savings and in one short week it went to nothing. Because despite being against the law the powers at being were still able to short sell fannie and freddie and even lehman all the way down. Lots of people were only invested in fannie/Freddy and lehman and lost everything they had. No more years to re build it again. This is very wrong. Makes Enron look like child`s play. i honestly believe that there will be the lowest voter turn out this coming elections in the US. Greed and no accountability to human kind were the anthems of this elite group of leaders who walked away with billions of dollars that they never worked for but stole from the people.

As one writer puts it and it may be very negative but " he hopes that the aliens are friendly"

To be proactive government needs to enforce the laws with the financial institutions that carry out these unlawful and inhumanly acts. And there should be quick ruling for these leaders within our Justice system. This is no longer about the US only. this is about the global markets. The entire world has come together to prop up the US dollar. We have taken a 10% hit on our dollar last few weeks because of the crisis in the US and now the globe. yet still we have been told that the Canadian economy is strong.

Any way

People need housing but will they be able to pay the rent without a job is the real question? What gives here? Jobs are first. Small businesses are very important- it accounts for a lot of jobs. Banks need to keep those loans coming. If they can t survive then people cannot pay rent. ((Wonder if a company that purchases rental properties and also maintains it , would be easier for the loan applications.-Just a thought-it creates jobs. Know the corp taxes are going to be less.)

All the more reason the investment decision to buy rental property via a system must be followed to a T more so than ever. One must look at everything from a global perspective and take action based on fundamentals- not emotions. There will be money to be made if we all survive this. Every time we go through hardships, seems like the worst and as we look back, we notice that the last one was a joke. So I don`t really believe it is the end of the world. But we MUST go back to basics. We cannot factor in appreciation and spend it up front in our business model. We choose a town/city where we think we should invest based on fundamental principles, and appreciation will be realized. Then we cross our fingers and hope hard--really hard.

Cash flow is everything. We need to find the RIGHT properties and the RIGHT tenants if we want this to work in these coming times. (Government subsidized housing may be looking good.)

Just my quick thoughts on the subject...IMO

Cheers
Oz