Archives for January 2009

Four Real Estate Investment Tips You Can Learn from Warren Buffet and Other Stock Investors

January 27, 2009 by Marco Santarelli

Some of the most successful stock investors have based their investing principals on value investing. Investors such as Warren Buffet, Benjamin Graham, and Irving Kahn have used value investing to build vast empires of wealth.

Value investing was conceived by Benjamin Graham and David Dodd, in their classic book, “Security Analysis”, written in 1934. Although they were talking about stocks, there is still a lot we can learn from value investing that can be applied to other vehicles such as investment real estate.

Keep in mind that the very definition of value investing is subjective. Some value investors only look at current returns and don't place any value on future growth. While other value investors base their strategies around the estimation of future growth and cash flows. Despite the differences, it all comes back to trying to buy something for less than it is worth.

Here are four things that real estate investors can learn from value investing: [Read more…]

Benefits of Investing in New Construction Real Estate

January 21, 2009 by Marco Santarelli

When it comes to investing in residential real estate, there are only two basic types of property you can invest in – new construction and resale.

Resale properties are more often than not purchased directly from the homeowner who has been living in it themselves or has been leasing it to tenants. They are typically not purchased from a builder or developer.

New construction properties are those that are purchased directly from the builder or developer who constructed the property. They are the owner and seller. They do not have a resident and have never been lived in before. In short, they are considered brand new.

If your investment focus is in pre-foreclosure, foreclosure, bank owned property (REOs), or probate sales then you are likely to be purchasing resale properties. Occasionally, however, REOs are new construction properties because the bank foreclosed on the builder or developer who built the property but could not sell it prior to the foreclosure.

Here are a few of the many benefits of investing in new construction real estate: [Read more…]

How Long Will This Recession Last?

January 14, 2009 by Marco Santarelli

Our economy has been in a recession for over a year. It contracted rapidly towards the end of 2008, and is likely to continue contracting through the first half of 2009 and probably beyond.

What exactly is a recession?

The generally accepted definition of a recession is a country’s drop in gross domestic product (GDP) for two consecutive quarters. The U.S. based National Bureau of Economic Research (NBER) defines economic recession as: “a significant decline in the economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales.”

United States Recessions

Since 1854, the U.S. has encountered 32 cycles of expansions and contractions, with an average of 17 months of contraction and 38 months of expansion. However, since 1980 there have been eight periods of negative economic growth over one fiscal quarter or more, and only four periods considered recessions: [Read more…]