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RE: The fallacy of Real Estate investing (from someone who's done it for 20+ years)
"I know that a lot of civil liberty people will cringe when I say this, but past behavior is a strong indicator of future behavior and if you are a real estate investor, you pay."
Definitely agree here. Had a few tenants who were a pain in the butt. Should have dug deeper when looking into their rental history.
At the moment, I find it hard to believe that Real Estate will continue to rise at the current pace, even if the stock market crashes. Repealing Dodd Frank may give the market a boost, but the market in San Diego seems ridiculously hot.
Thanks for your comment. In regards to property in your neighboring state to the east, the market rises here are dulled compared to California. This used to be the fastest growing real estate market in the country (pre 2008) but was also one of the worst hit with foreclosures, etc. in 2008. Consequently there is still a "once bitten, twice shy" approach about Phoenix. Probably Las Vegas too. Developers are not and have not been developing new property here, so there is a supply/demand problem forcing rents higher.
Surprisingly though, the market value of real estate properties hasn't risen that high. We are still seeing higher end homes at about 80% of their 2007 high price points, and low end condos and multi-unit properties about 85%. There is a lot of headroom here for rising prices.
Blackstone are the largest holders of residential real estate properties, and they are funded by hedge fund investment from Wall Street. Its not Dodd-Frank that will have a huge impact on that, as that might only open up lines of credit to lenders. For those large scale buyers, they will be more able to acquire properties if the equities market takes a dive, which is a likely scenario in the near term. Also we've had a lot of Canadian and Chinese investors come in to purchase properties with cash here, but that seems to have dwindled.
So it might well be that in the California market, the rising real estate prices has made that less attractive. But consider Nevada or Arizona and you might find some interesting differences in the economic numbers. Additionally AZ is a great place to be a landlord because of the tenancy statutes here, that provide quick eviction proceedings unlike in CA. I believe Utah & Colorado share similar statutes but it clearly favors out of state investors to bring their money into the state.