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"News, Analysis and Insight for Real Estate Investors"

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Publisher: Donna Robinson        Issue: August 2003

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The first one was so successful, we decided to do another...

Hi there real estate investors. If you missed last months walk through a real deal, you missed a wonderful learning experience. I received excellent feedback from all who attended. If you would like to attend the next session, and if you can attend 2 sessions on a Saturday morning from about 11 AM to 1PM, you should make plans to register immediately. Our next project will likely be located in either the West End area, or Decatur. Since these sessions depend on timing with contractors, the actual dates and locations have to be determined as the scheduled work allows.

The first session will be held within the next two to three weeks. Registrants will be notified of the dates and location as soon as registration is received.

As we did last time, session 1 will be a visit to the property before any of the work is done. During this visit we will discuss in detail the present condition of the property, versus what it will take to achieve the project's objectives and plans. You will also receive specific information on the actual numbers involved in the deal.

Session 2 will be a return visit after most of the rehab work has been completed. We will compare our notes from session 1 to see how it went versus what we expected. We will talk about any problems, delays or other events that took place during the rehab process. You will receive copies of actual paperwork pertaining to the project.

This is a great, hands-on way to experience the process of a real-life deal. As with our first two sessions, all attendees will be notified when the deal is completed. What it cost, what it sold for, and how the deal actually worked out. You can't get any better experience than working through an actual deal from beginning to end. It's like having an investor friend who takes you through his (or her) entire deal. If you want to learn the brass tacks of real estate investing, this is a really safe way to get started. And, it beats the heck out of a classroom discussion, where everything is only theory.

We are down in the trenches doing the real thing.

It's only $99 for both sessions and space is limited, so don't wait. Register today. See the info below to register. Registrants will be notified of the actual location, date and time of each session.

If you miss a session you can make it up on another project at no additional charge. Single session registration is available for $65 per session. Your choice of the first or second session. Subject to availability.

by Donna Robinson drobinson@reihelp.com

If you spend time reading magazines or watching shows devoted to investments and "how to" articles about money, then you probably have read that there's no better time than now to invest in the stock market. Riiight...

I would submit to you that there is never any better time than the present to invest in real estate. Yet, in the investment media you hardly ever see or hear anything other than basic freelance filler information about real estate investing.

I am beginning to wonder if there is a deliberate tendency among financial publications and TV shows to glorify and focus on stocks over real estate, when the fact is, over the long term, there is absolutely no way the stock market can beat real estate returns. -- Not in the short term either, in Atlanta, GA.

Read their ads or watch their commercials. Who's paying the bills? Investment houses, stock brokers, institutional investment concerns, etc., mainly those who derive their income from people who buy and sell stocks.

I believe that these publications and shows, whether intentional or not, serve to promote stocks as an investment vehicle, without giving equal attention to the importance and value of real estate. The fact is that real estate is a consistent performer, not nearly as volatile or subject to outside forces as the stock market is.

After the 9/11 event, we all watched the melt-down of a stock market already reeling from corporate scandals and crooked accounting practices. How amazing that a bunch of crooked corporate officers and 19 terrorists could bring down the entire stock market and slow the US economy into a recession in just a years time. And, in the process, destroy years of gains belonging to average investors with IRA's and 401K's. What happened to real estate during this same period? Have you seen any articles on what a great performer real estate has been during the past couple of years, even in the wake of 9/11?

I'll bet you haven't. I have not either. Though I know from personal experience that the past three years have been excellent for real estate investors in general. Hey folks, even my Mom, who lives out in the country and focuses on homemade crafts most of the day is averaging 20% gains per year over the past 3 years. Duh... hello? Is anybody getting the message here? Why aren't the so-called experts talking up real estate? How many stocks do you have that have earned 20% a year over the past 3 years? Is your 401K up 60% since 2000?

Even as we endure the third year of recession nationwide, the fact is that the real estate industry, primarily on the residential side, has kept the entire economy from plunging into full blown depression.

But what do we get from the advisors? Mostly fabricated freelancer junk about a nationwide "housing bubble" and the implication that our own house values could be doomed. Those of us who are dumb enough to own our own home, now need to worry that it's value could collapse any day. As far as my research could determine, there has never been a housing bust on a national scale, and virtually all documented cases where housing prices dropped disastrously were confined to small areas.

These areas suffered drastic price drops as a result of some major event that negatively impacted employment that immediate area.

For Example:

The Houston real estate bust of the early 80's.

Oil had been at an all time high during most of the 70's thereby fueling a large migration of workers to areas such as Houston, Texas, which were at that time, employing many oil workers, and hiring heavily. Then, with political changes during the Reagan administration, oil prices began to fall, and oil became cheaper to buy overseas than it was to produce at home. Over the following months this set off a ripple effect throughout the oil industry in Houston, which eventually translated into thousands of layoffs, lost jobs and cut backs. Since the local job market is the real driver of property values, the loss of jobs began to translate into falling demand for housing. This translated into fewer sales and thus real property prices dropped quickly and drastically among those sellers who had to get rid of their property. Job losses also affect commercial property demand.

The same sort of thing happened in California when they closed the military base at Long Beach. It was a severe jolt to the community economically, causing the loss of military dollars and civilian jobs in businesses that largely served the military population. But, it took several years for all of these events to materialize. No observant investor should have been caught off guard.

If the powers that be should suddenly decide to close Dobbins AFB in Marietta, then I would definitely plan to buy some property in Cobb county after that event, or sell my holdings there at the first sign of a closing. But, while Marietta might be severely affected, Buckhead real estate agents probably would not even notice.

In Atlanta, we have certainly seen a slow down in sales overall, since the recession started. But our job market is fairly well balanced. There are specific neighborhoods that could be drastically affected by certain local economic events, but no single event, short of a major disaster could affect the entire metro area. There are some areas, in the suburbs that have not missed a beat and real estate prices have continued to climb at normal rates of 5 to 7% per year, while some areas like Decatur are flattening out but not dropping.

The high end housing over $200K has been the most affected price range, with these houses moving very slowly in most cases. Due to job losses at Worldcomm and the tech / communications sectors in general, Atlanta's high end market has suffered the highest average foreclosure rate and a severe slowing of demand. While all residential sectors here have been affected to some degree, low interest rates have kept first time home sales in the entry level price ranges (below 150K) going at a more or less normal pace.

The economic sectors and their job markets are the real factor to consider in analyzing the future of metro Atlanta real estate. The 13 county metro area has a very diverse job mix with everything from heavy manufacturing, to retail, to aerospace, to technology, to services. In most cases, recessions tend to affect specific sectors of the economy, and thereby have the greatest impact on the real estate owned or rented by people who work in the affected job sector. I have a recently rehabbed property for sale in the Hapeville area. But, given the layoffs at Hartsfield, I don't plan to be at the airport handing out flyers anytime soon. On the other hand, there are several hospitals in the area and there aren't any layoffs happening in the medical industry. You can find me there handing out my "House For Sale" flyers to well paid medical professionals.

With any financial show or publication, keep in mind that the content may actually be serving the agenda of it's advertisers. I personally am weary of the shallow coverage that real estate gets in general, and especially the tendency to be too negative about the most reliable investment in the world. But, since stock brokers, corporate officers, investment advisors and block traders can't figure out a way to control your property values like they do stocks, all they can do is make it sound like a bad idea.

While diversification of investments is always prudent, real estate has many different types of investment choices.

For you stock holders out there, read this excellent article on Real Estate Investment Trusts: http://www.kiplinger.com/columns/balance/archive/2001/balance0813.html

Whatever your investment plans, carefully consider the source of the advice you are getting, and what agenda, if any, that source might have.

Written by Donna Robinson