▪ Do you have enough equity , you do not trust obligations: what then ?
The course stone! Terra firma !
Certainly , real estate has problems . Pipes dripping and leaking windows are examples . But at least we can understand . You can see with his own eyes . We also saw a lot last weekend when we visited a well located two blocks from our office in Baltimore - a building of 13 apartments offered at auction .
There a few years ago , there would have been one or two people during the visit . Last week there were at least 15, maybe more . We found that we knew some of them ... experienced real estate investors in the Baltimore area . Others were new . A couple came to India. A man who spoke little English , was Chinese .
How Baltimore apartments that almost all the slums they attract global investors ? We do not know . Perhaps this is the proximity of the Johns Hopkins University or Peabody Conservatory of Music . Maybe investors are just looking for a better deal than what they can find in big cities .
▪ Brand watches Brand cities ...
There are some years we coined the term " city brand " . The idea was simple. More and more people are unattached ... especially rich people . Often they are in semi- retirement, manage their businesses or investments by telephone and internet . They can live wherever they want.
These people - many of them being "new rich" - leading auto brands , wear clothes and branded watches. It seems reasonable to assume they would also live in the cities of brand - those that attract the international elite . Then, in the chic cocktails, they just say to live in London or New York , and so have something in common with many other guests . If they do not have an apartment , they know someone who has one.
At the top of the list of cities are brand London , Hong Kong and Singapore. Paris , New York , Vancouver and many other tailgating .
In Paris, almost all expensive apartments changing hands are bought by foreigners. Central London is just about the same thing. Little "local" can afford to live in the most exclusive areas. Foreign buyers bid up the price and change the atmosphere of the neighborhood.
We lived in a building in London, for example, where almost all of our neighbors were Russian, Japanese, Chinese or Brazilian . Insofar as most owners had other homes, sometimes more , the building was as quiet as a library. We rarely crossed paths people .
Baltimore , however , has yet to make his place in the category of " cities " brand . Nobody buys real estate in Baltimore for reasons of prestige. Nobody boasts of having " a little pied a terre " in Baltimore. Prices reflect this fact .
Here , investors have a sharp pen and little tolerance for large expenditures. The building that I visited last week had been "improved" by previous owners ... very roughly . Woodwork that have been dismantled and repaired had been redone with putty and painted. Pipes that have been replaced remained in place along the walls and ceilings. Scaffolding raw wood stairs maintained to prevent them from falling. Imitation parquet linoleum covered the floor .
▪ Should we invest ?
A real estate professional has given us some explanation : " Prices have risen dramatically So be careful There is a lot of money that comes owners will have to compete for tenants This will put margins. . . . under pressure " .
"Does that mean it's not a good place to invest ? " we asked .
" Well , I do not think we 'll see the kind of performance found it a few years ago . Were obtained between 10 % and 12% on certain projects. Were invested one million dollars, and the annual net yield was 100,000 $ . at present , prices are on the rise. property rates too. so that we can get a rate of 7% , maybe ... or 6%. this is not great, but n ' is not awful. And this is better than playing the stock market . "
Meanwhile, another pro real estate in Florida this time , we explained what appears to be even more advantageous :
"I can not find good deals on the most traded markets," he said. " But there is still money to be made if one is willing to go a little further and work a little harder. I have an eye on a building with 55 apartments . I think I can get it for approximately $ 1.8 million . the total budget, including closing costs , work and reserves could amount to approximately $ 2.2 million . We do the work . We find good tenants . then we probably go seek refinancing Fannie Mae - . probably what we would restore between 60% and 75% of our capital there was an almost guaranteed return of 7.5% ... probably a little more. "