Fixer Upper Smalltown USA


Our last real estate project has been a Fixer Upper in Smalltown USA.

Real estate prices continue to fall giving us a chance to get fixer upper real estate while the bargains last.

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This was the fixer upper.

Real estate… imagination… research for value… creativity… and a bit of elbow grease create five powerful profitable combination… especially in…

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depressed real estate markets. See how you can use these five qualities to beat inflation below. Here it is now.

of  stock and bond markets.

Merri and I like investing in real estate… especially in places like Florida where prices have fallen so dramatically and created so much value.

Our current project is in a small central Florida town where we purchased 16 acres… with orange groves… and a house in bad repair.

The process of fixing has begun. First this garage… had a guest house that had been almost…

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abandoned.   Now it looks like…

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this.  Outside and…

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in.

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This process fills part of Merri’s and my  creative desires as it…

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adds fun and value into out lives.

Prices are down and may fall more, but the demographics support.

Unemployment can continue to stall Florida’s real estate recovery. Plus there was a huge wave of 5 year balloon mortgages in 2005… that may create another wave of defaults.  So real estate in Florida could take another hit.

Keep these short term facts in mind but look at the long term demographics.

A USA Today article “Where will everybody live?” By Haya El Nasser outlines three significant facts about this.

First, the American population has risen from 200 million to 300 million in 39 years. At present growth rates the next hundred million will come in only 34 years!

Second, today each American owns 20% more developed land (housing, schools, stores, roads) than 20 years ago. By the 1990s 1.7 acres of land was developed for each additional person.

Third. More people need more space.  100 million additional people will need 70 million new homes and 100 billion square feet of non residential space.

Inflation supports real estate investments.

Construction costs are not going to fall! Normal inflation and increased demand from emerging markets for cement, steel, timber and other basics assure this. Plus environmental concerns will continue to slow acceleration of supplies as well.

Another reason for real estate investments in the US is changing utility. For example my mom’s home which was once the bastion of suburban WASPs is now filled with Mexicans, Chinese and Ukrainians. Our builder friend tells me that at least half his home buyers are first time immigrants who use a family plan (the whole family comes over pitches in and buys a house). This means that a single house is once again becoming more popular as a place for two, three or even four generations to live together rather than just one.

House lots used to be 5,000 square feet minimum. Now they can be 2,500 square feet. That’s a big change in utility.

Technology is altering the concepts of time and space so…property (like the farms we live on) that was once pretty useless, or land in the desert like the dry part of the land in southeast Oregon suddenly has a new utility. This is especially true for tens of millions of boomers who will be highly mobile when they retire.

Next, we need to compare US property prices in global terms. Sometimes the forest is hard to see because of the trees and real estate values are hard to see because of local comparables.

Prices of housing in the US may seem high, when you compare them with US house prices of five or ten years ago.

What happens when we compare US real estate prices to those in other industrialized countries like France, England, Denmark and such instead? The thought. “We ain’t seen nothing yet” may arise!

There is another reason that Merri and I like investing into real estate.   There is a local fundamental utility that is easier to understand and see.

We always invest with the understand that there is always something we do not know.

A December New York Times article “11 Secretive Banking Elite Rules Trading in Derivatives”  by Louise Story explains why when it says:

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.

The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available.

Banks’ influence over this market, and over clearinghouses like the one this select group advises, has costly implications for businesses large and small.

Derivatives are also big business on Wall Street. Banks collect many billions of dollars annually in undisclosed fees associated with these instruments — an amount that almost certainly would be lower if there were more competition and transparent prices.

Just how much derivatives trading costs ordinary Americans is uncertain.

But big banks influence the rules governing derivatives through a variety of industry groups. The banks’ latest point of influence are clearinghouses like ICE Trust, which holds the monthly meetings with the nine bankers in New York.

Even when we use good investment analysts to invest in stocks and bonds, there is a lot more… going on in places we cannot see… we do not know.

We do not like Flipping real estate!

Flipping is a nice concept to buy and quickly resell for a great profit… but this is usually pure speculation. Most flippers end up broke!

We believe in value added real estate investing.

Add imagination to your real estate investment.

Combine the miracles and talents that lay within you. By all means study how to be a better investor or business person each and every day. Use the benefits of modern technology. Create a common sense approach to searching for good value in investments. Develop external disciplines. Don’t spend more than you have. Work. Save. Invest. Hire professionals to help you study the markets. Even study economics and finance if you wish.

But match each of these external steps by also looking within. You are unique. You are a fountain of wealth…get to know yourself better. Tap the incredible power, knowledge and experience you already have. Your wealth not only will grow, but will become better, an everlasting flood of abundance that makes your ordinary journey through life an extraordinary process you’ll never want to end.

Real estate… imagination… research for value… creativity… about of elbow grease create a powerful, profitable combination… even in these depressed times!

Gary


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