Real Estate Goes Global

[an]

[quote=CA renter]Joe, I agree with you that many of these families think of RE as the ultimate investment, and that they are often well-situated buyers/owners. The problem will be those who buy so many properties that they can’t have just their family members living in them, so they will have to rent them out to locals who might not be of the same caliber as those owners.[/quote]See, while some have a short sighted view on RE investment, other have a much longer view on things. They view RE investment as their retirement nest egg. I know many who are doing just what joec described. They move, keep their old house and rent them out. Now, those who are nearing retirement have 2-3 houses in nice upper middle class area with rent to supplement their retirement. They’ll either acquire more when the time arise or they’ll pass it on to their kids.

[FlyerInHi]

I’m a believer in buying where the Chinese buy.

Vegas has a Chinese radio station and the genting group is building a $4 billion casino so there will be lots of Asian expats in the next decade.

$1 million investment in a casino that results in apportioned 10 employment means a green card for the family. Easier to buy real estate after you get visa.

Downtown redevelopment is led by Tony Hsieh.

[CA renter]

[quote=AN][quote=CA renter]Joe, I agree with you that many of these families think of RE as the ultimate investment, and that they are often well-situated buyers/owners. The problem will be those who buy so many properties that they can’t have just their family members living in them, so they will have to rent them out to locals who might not be of the same caliber as those owners.[/quote]See, while some have a short sighted view on RE investment, other have a much longer view on things. They view RE investment as their retirement nest egg. I know many who are doing just what joec described. They move, keep their old house and rent them out. Now, those who are nearing retirement have 2-3 houses in nice upper middle class area with rent to supplement their retirement. They’ll either acquire more when the time arise or they’ll pass it on to their kids.[/quote]

Right, I totally get this, but it doesn’t change the fact that getting a ~3% yield on RE (maybe, and there are so many things that can go wrong with rentals) is worse than getting a 5-7% yield on Treasuries. Of course, if they don’t trust the Treasury market, then RE is a better bet.

Buying rentals is a good bet when prices are low and interest rates are “normal” or high. I don’t think it will be a good investment for those who are buying high.

[an]

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[joec]

[quote=CA renter]

Right, I totally get this, but it doesn’t change the fact that getting a ~3% yield on RE (maybe, and there are so many things that can go wrong with rentals) is worse than getting a 5-7% yield on Treasuries. Of course, if they don’t trust the Treasury market, then RE is a better bet.

Buying rentals is a good bet when prices are low and interest rates are “normal” or high. I don’t think it will be a good investment for those who are buying high.[/quote]

Another thing to factor is even if you are getting 3%, a lot of times there’s still a loan so it’s a leveraged bet. Leverage, of course, cuts both ways but if the real estate market isn’t a crazy bubble, then getting a 3% return to match inflation for someone with 20% down is more like a 15% return (I think)…

As others have mentioned, there is just more “trust” from what I’ve seen with real estate as an asset than stocks and bonds which a lot of Asians feel is an unfair and manipulated game. With real estate, you get depreciation against a decent income to also keep that W-2 lower and I’ve seen parents put their kids on the deed/loan to let them depreciate against their taxes as well and get a tax write of for rental properties…There is just a certain level of sharing which I didn’t see in many Caucasian families (kicked out at 18, self fund college, etc…)

[spdrun]

Where are people buying that they’re only getting 3% return? 6% isn’t hard to find in the US, 8% is relatively available if you want to do some work.

[CA renter]

[quote=spdrun]Where are people buying that they’re only getting 3% return? 6% isn’t hard to find in the US, 8% is relatively available if you want to do some work.[/quote]

In San Diego, it’s tough to find a reliable 3% return on a RE investment. Not talking about other areas regarding this type of return. Where the Asians are buying, getting any kind of return at all is very difficult because everyone is pushing prices to the upper limits.

[CA renter]

[quote=joec]
Another thing to factor is even if you are getting 3%, a lot of times there’s still a loan so it’s a leveraged bet. Leverage, of course, cuts both ways but if the real estate market isn’t a crazy bubble, then getting a 3% return to match inflation for someone with 20% down is more like a 15% return (I think)…

As others have mentioned, there is just more “trust” from what I’ve seen with real estate as an asset than stocks and bonds which a lot of Asians feel is an unfair and manipulated game. With real estate, you get depreciation against a decent income to also keep that W-2 lower and I’ve seen parents put their kids on the deed/loan to let them depreciate against their taxes as well and get a tax write of for rental properties…There is just a certain level of sharing which I didn’t see in many Caucasian families (kicked out at 18, self fund college, etc…)[/quote]

Agreed.

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