Stagflation Investment Idea – Part I: Multi-family residential real estate

[karim0028]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

but how can we have inflation if the money supply isn't growing? sorry if this is a dumb question. i just remember the last inflation and it was all about money supply. every day in the paper it was posted. all the m's.

fixed rate debt is excellent if there is inflation. not, if not.

You gotta read EJ's earlier work... Inflation is all around you. The banks are getting free money, speculating in markets, raising costs of commodities and it will show up in your day to day life in the next couple of months as the price of every commodity has damn near doubled in the last year... Just wait till you go buy your next pair of jeans or undies.... Cotton has run up about 100% in the last year... So has coffee, cattle, wheat, corn, etc.. Basically everything we need to survive. It takes about 6-9 months to see it in retail prices.

[raja]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

My opinion on Amerman is that his fixed income mortgage idea is great . . . as long as certain conditions prevail, but it's definitely not a sure thing.

I wrote him an email saying, "What if the government creates a New Dollar worth 5 Old Dollars, and decides that henceforth all debt owed to the Banks is automatically to be paid back one New Dollar for every Old Dollar." We all know the banks are Too Big To Fail . . . it's a national security issue, after all. And we wouldn't want to do anything to harm the Financial Elite's bottom line.

Amerman never responded to my email. He either didn't receive it or just ignored it. If it was the latter, I can understand why he didn't reply; the scenario I outlined would undermine his Big Idea, and that would not be good for his bottom line.

[lalla]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

thanks for the headsup, going to go out and load up on undies and t shirts.

what about gold miners? coal? tin? will the whole deal come down around our ears? no banks, no markets, like the zero hedge people think? is it insane to be in the market at all? i have tried to invest in stuff we use and have to use.

i haven't bought physical gold because i keep seeing the day we need to sell it, and there will be lines around block, everyone carrying their little bag of coins while the price is plummeting.

[labasta]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

My opinion on Amerman is that his fixed income mortgage idea is great . . . as long as certain conditions prevail, but it's definitely not a sure thing.

I wrote him an email saying, "What if the government creates a New Dollar worth 5 Old Dollars, and decides that henceforth all debt owed to the Banks is automatically to be paid back one New Dollar for every Old Dollar." We all know the banks are Too Big To Fail . . . it's a national security issue, after all. And we wouldn't want to do anything to harm the Financial Elite's bottom line.

Amerman never responded to my email. He either didn't receive it or just ignored it. If it was the latter, I can understand why he didn't reply; the scenario I outlined would undermine his Big Idea, and that would not be good for his bottom line.

That's a good point.

I thought that a couple of years ago when the "economy" was exciting and fearful.

I can potentially see a time in the years or maybe decades to come where they introduce a brand new currency in the USA.

Possibly when the separation process happening now between the state and banks is at a stage where the political will to reindustrialize (possibly along Eric's lines of thought) will occur but... the state by that time will be flat broke with nowhere to turn except "doing a Zimbabwe". In this case, I suppose they will create a new currency and start again. Possible the Amero, although I'm a little suspect about involving Mexico, even though the Mexican and American people are, I gather, in some states by and large the same entity now.

[Chris Coles]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

You have reminded me of a single statement burned into the brains of those of us old enough to remember Harold Wilson here in the UK:

"It does not mean that the pound here in Britain, in your pocket or purse or in your bank, has been devalued." Said Prime Minister Harold Wilson.

The only alternative, he said, was to borrow heavily from governments abroad - but the only loans on offer were short-term ones.

1967: Wilson defends 'pound in your pocket'
The Prime Minister, Harold Wilson, has defended his decision to devalue the pound saying it will tackle the "root cause" of Britain's economic problems.
http://news.bbc.co.uk/onthisday/hi/d...00/3208396.stm

[chr5648]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

read this book. that's his argument... neo-industrial development 'should' replace the fire economy. but the csm review starts... 'Despite the disparity between where the US economy is heading and where the author would prefer to see it go...'

you're new here & welcome... here's the deal. itulip invests in the world 'as is' not as we wish or hope it was... or will be in the future. gold & bonds since 2001. 'should' stocks have done beat gold & bonds? yeh. did they? nah.

from here... 'should' rents fall? yep. will they? not so long as the fire econ boyz run the show. you wanna bet they plan to leave quietly any time soon?

Thanks captain obvious, I have been on these forums for a few years, I know what the heck is going on. In addition to spending nearly 5 years in real estate development (fiRE).

PS. The book is nothing more than the combined posts of EJ on the itulip forum, and then a few chapters on the wishful thinking of a "TECI" economy, which has almost no chance of any "world 'as is'" fruition.

[Jay]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

fixed rate debt is excellent if there is inflation. not, if not.

As long as the collateral underpinning your leveraged debt doesn't further decrease in value. Be careful here. If you already own and don't plan on moving, go right ahead and take out all the money you can out of your piggy bank of a house, if you still have equity that is. Otherwise I would be careful about buying a house right now just for the low interest money, unless you love the house and don't plan on moving for a very long time.

[raja]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

I look at it in terms of is where I can invest to lose the least . . . because I don't see any investment categories that don't have minefields.

Yes, real estate values will go down.
But compare that to gold where the gov't takes 28% (or possibly more) of your profits . . . and with gold you've also got the challenge of knowing when it's the right time to sell, i.e., where's the top.

Gold is largely of symbolic value, and it's worth is basically whatever the government allows it to be (they can even take it away from you). On the other hand, real estate has real value, and it's value that will never go away -- although it can and probably will go down -- as long as you keep the roof from leaking.

There are at least major 3 factors I can see in deciding when to buy real estate: price, inflation and interest rates.
Housing prices will go down, inflation will go up, interest rates will go up . . . but probably at different times and at different rates. Is it better to buy now and lock in low interest rates . . . or wait till housing prices drop further . . . or buy before inflation really starts to kill the dollar.

It takes a supercomputer to figure all that out . . . too many variables

Amerman has done some research calculating comparative profits using 20 scenarios with different variables. I'm too cheap to pay to read it . . . and I doubt that he is using supercomputers . . . so I'm just going to go by intuition.

[Jay]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

I would also factor in taxes, insurance and upkeep into your real estate calculations. Remember that in an environment where municipalities are scrounging for cash, real estate is one asset that can't be relocated away from the taxman.

[Milton Kuo]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

I would also factor in taxes, insurance and upkeep into your real estate calculations. Remember that in an environment where municipalities are scrounging for cash, real estate is one asset that can't be relocated away from the taxman.

This is an idea that Dr. Michael Hudson oftentimes states in many of his writings: that property taxes are a very reliable and steady stream of income for governments. Interestingly, one way to punish the FIRE economy is to allow mark-to-fantasy appraised values on foreclosed properties and then force the banks to pay the property taxes. That's one way of getting QE money away from speculation and into (government) services.

[Jay]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

This is an idea that Dr. Michael Hudson oftentimes states in many of his writings: that property taxes are a very reliable and steady stream of income for governments. Interestingly, one way to punish the FIRE economy is to allow mark-to-fantasy appraised values on foreclosed properties and then force the banks to pay the property taxes. That's one way of getting QE money away from speculation and into (government) services.

Which is one of the many reasons I continue to rent and likely will do so in the foreseeable future. Real estate still has a lot of deleveraging to go in my mind. Taxes, unemployment, interest rate increases, hidden inflationary upkeep costs, a poor credit environment, unsold overhang, and bubble downside overshoot will help that process among other things. There are too many negative variables to put a toe in for me. The right multifamily could be a decent investment, however, I would likely only do something like that if I was the one making the decisions and only on a local level. I don't have the time presently to take that on. That is only my perspective and I am also sure there are groups out there who will do well in the multifamily market which is obviously a different beast than the decision to buy a home. It is about cash flow and risk adjusted return.

[metalman]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

Which is one of the many reasons I continue to rent and likely will do so in the foreseeable future. Real estate still has a lot of deleveraging to go in my mind. Taxes, unemployment, interest rate increases, hidden inflationary upkeep costs, a poor credit environment, unsold overhang, and bubble downside overshoot will help that process among other things. There are too many negative variables to put a toe in for me. The right multifamily could be a decent investment, however, I would likely only do something like that if I was the one making the decisions and only on a local level. I don't have the time presently to take that on. That is only my perspective and I am also sure there are groups out there who will do well in the multifamily market which is obviously a different beast than the decision to buy a home. It is about cash flow and risk adjusted return.

no body here attended the seminar today? shit... hoped to poach your learnings.

silence = either the seminar sucked (silent horror) or killed it (sssssssssh don't tell anyone).

hmmmm. how to test?

[jpatter666]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

no body here attended the seminar today? shit... hoped to poach your learnings.

silence = either the seminar sucked (silent horror) or killed it (sssssssssh don't tell anyone).

hmmmm. how to test?

Actually, the seminar was lightyears (my opinion) better than the first one. The lesson of being serious with your audience took hold.

One glitch was that the audio for asking questions failed, but we all were fine typing them in. And you know what? EJ -- that *should* be the way to ask questions going forward. We can all ask them at once, they get queued up, no accent issues, no possibility of misunderstanding (it's very clear what you typed).

Now, all that said, I'm not sure this is the investment for me, but I was far more impressed with the answers and scope of knowledge for this group.

EJ, well done.

[karim0028]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

no body here attended the seminar today? shit... hoped to poach your learnings.

silence = either the seminar sucked (silent horror) or killed it (sssssssssh don't tell anyone).

hmmmm. how to test?

How about a third option Didnt know there was a seminar today!

[raja]

Re: Stagflation Investment Idea – Part I: Multi-family residential real estate

I would also factor in taxes, insurance and upkeep into your real estate calculations. Remember that in an environment where municipalities are scrounging for cash, real estate is one asset that can't be relocated away from the taxman.

I'm not too worried about tax and insurance. These have to be kept within bounds because every homeowner must pay them, so there will be a natural check on their rising too high.

By the way, a general comment here:

The greedy rich folks who have brought about the current dismal state of the world economy are too stupid and arrogant to understand that the middle and lower class working people are the bedrock of the economy -- the true wealth generators. Like an insensate parasites, the Financial Elite are killing their host, and they in turn will suffer.

Of course, the higher ups will escape, taking their billions with them. But the remaining leeches won't be happy with the world they have created around themselves . . . .