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davelj
ParticipantAnyone who buys a 5-year note yielding 1.5% is f*cking insane. I don’t care what currency it’s in. If you want to diversify your currency holdings (or bet on a currency, for that matter) then just buy the currency; there’s no need to commit to 5 years at a paltry 1.5%. I would put money in a bank at 0% or under my mattress before I’d commit to a 5-year note at 1.5%. If rates uptick just a little that bond will get whacked – do the math. And if you’re holding it until maturity, well… you’re just getting 1.5% per year. So, the Nips are crazy. What else is new?
Of course we’ve got our share of crazies too… we’ve got people willing to hold 10-year notes yielding 5.5% or thereabouts, which is barely above inflation. Meanwhile, you can get a CD that yields almost the same rate with almost zero duration risk. Go figure.
The world’s gone mad. But at least it’s entertaining.
ParticipantDear Scruffy,
Early-1990 called. They want their (identical) observations, opinions and forecast back.
Signed,
DaveParticipantDear Scruffy,
Early-1990 called. They want their (identical) observations, opinions and forecast back.
Signed,
DaveParticipantBugs, et al… yeah, I spaced for a moment on calculating the lot size. The lot is 108,000 square feet or almost 2.5 acres. (It’s 10,000 square meters and I just multiplied by a little over 3, thus forgetting the “squared” part. Doh!)
Bugs, I agree with your entire last paragraph. It looks overbuilt down there and heavily influenced by the Southern California and Arizona real estate markets. My understanding is that the typical buyer used their home equity up here to make a down payment on a place down there. I will be curious to see how things shake out down there over the next couple of years. It’s hard to believe that there’s enough “real” demand for everything that’s being built down there…
Having said all that… the guy who wants to do this particular development is not a dumb gringo (he’s Mexican, has dual citizenship, and is well-connected in Baja), although his timing may be off here. He’s done a fair amount of building, both commercial and residential, in Tijuana (and he’s built several homes in Chula Vista) but he hasn’t done a project like this. (There won’t be any water or septic issues for this particular property.)
I told him point blank that this wasn’t my type of investment but that I’d introduce him to some people that I know who do this sort of thing. I’m basically agnostic on the whole thing. I wish the guy well.
As I said previously I’m just interested in what the spread is between “similar” parcels in Baja and San Diego. And from the numbers bandied about thus far it looks to be larger than I thought.
Right now you can buy a newly constructed 1200 sqft 2bed/2bath condo in a reasonably nice tower on the ocean in Rosarito for about $250K – $300K. The same unit in La Jolla/Del Mar/Solana Beach/etc. would probably cost between $750K and $1.25 million (depending on lots of factors). So I was wondering if the spread was larger on raw land, and at least in this case it appears to be the case.
ParticipantBugs, et al… yeah, I spaced for a moment on calculating the lot size. The lot is 108,000 square feet or almost 2.5 acres. (It’s 10,000 square meters and I just multiplied by a little over 3, thus forgetting the “squared” part. Doh!)
Bugs, I agree with your entire last paragraph. It looks overbuilt down there and heavily influenced by the Southern California and Arizona real estate markets. My understanding is that the typical buyer used their home equity up here to make a down payment on a place down there. I will be curious to see how things shake out down there over the next couple of years. It’s hard to believe that there’s enough “real” demand for everything that’s being built down there…
Having said all that… the guy who wants to do this particular development is not a dumb gringo (he’s Mexican, has dual citizenship, and is well-connected in Baja), although his timing may be off here. He’s done a fair amount of building, both commercial and residential, in Tijuana (and he’s built several homes in Chula Vista) but he hasn’t done a project like this. (There won’t be any water or septic issues for this particular property.)
I told him point blank that this wasn’t my type of investment but that I’d introduce him to some people that I know who do this sort of thing. I’m basically agnostic on the whole thing. I wish the guy well.
As I said previously I’m just interested in what the spread is between “similar” parcels in Baja and San Diego. And from the numbers bandied about thus far it looks to be larger than I thought.
Right now you can buy a newly constructed 1200 sqft 2bed/2bath condo in a reasonably nice tower on the ocean in Rosarito for about $250K – $300K. The same unit in La Jolla/Del Mar/Solana Beach/etc. would probably cost between $750K and $1.25 million (depending on lots of factors). So I was wondering if the spread was larger on raw land, and at least in this case it appears to be the case.
ParticipantGood point. Let’s assume it’s approved for as many condos as regulations will allow. My friend’s received approval to build an 8-story condo tower with 5 units/floor, another 20 townhomes in two rows of 10 each, and a clubhouse and pool. The land is on a hillside so every unit as well as the clubhouse and pool will have an ocean view. I’m thinking the units will be 2br/bath of around 1200 square feet each.
Any information would be appreciated. I’m really just interested in this from a curiosity standpoint of what kind of discount this sort of land goes for by virtue (or penalty) of being south of the border.
ParticipantGood point. Let’s assume it’s approved for as many condos as regulations will allow. My friend’s received approval to build an 8-story condo tower with 5 units/floor, another 20 townhomes in two rows of 10 each, and a clubhouse and pool. The land is on a hillside so every unit as well as the clubhouse and pool will have an ocean view. I’m thinking the units will be 2br/bath of around 1200 square feet each.
Any information would be appreciated. I’m really just interested in this from a curiosity standpoint of what kind of discount this sort of land goes for by virtue (or penalty) of being south of the border.
ParticipantI would love to see a recession. I would equally love to see GDP come in at less than 1% this quarter. But here’s what could happen in the short term: the markets would continue to climb on the hopes that weakness would lead to lower interest rates. That’s where we are right now: good news is good news (for earnings) and bad news is good news (for interest rates). And it’s going to remain that way until the market thinks earnings are actually going to be less than projected. If the market sees little negative impact on earnings (from a slowing economy) while interest rates decline, the market will continue to climb. I, for one, would like to see considerably lower prices for most assets, as I think we’re considerably out of equilibrium. I’m in Jeremy Grantham’s camp on this issue.
ParticipantI would love to see a recession. I would equally love to see GDP come in at less than 1% this quarter. But here’s what could happen in the short term: the markets would continue to climb on the hopes that weakness would lead to lower interest rates. That’s where we are right now: good news is good news (for earnings) and bad news is good news (for interest rates). And it’s going to remain that way until the market thinks earnings are actually going to be less than projected. If the market sees little negative impact on earnings (from a slowing economy) while interest rates decline, the market will continue to climb. I, for one, would like to see considerably lower prices for most assets, as I think we’re considerably out of equilibrium. I’m in Jeremy Grantham’s camp on this issue.
ParticipantThat surprises me in the context of that WSJ article from a few months ago stating that “land’s share of property prices increased on average to 51% in 2004 from 32% in 1984.” Now, granted, we are talking South Carolina here. But, I’d think at least 20% of the purchase price would be assigned to the land. But, hey, whatevs.
ParticipantThat surprises me in the context of that WSJ article from a few months ago stating that “land’s share of property prices increased on average to 51% in 2004 from 32% in 1984.” Now, granted, we are talking South Carolina here. But, I’d think at least 20% of the purchase price would be assigned to the land. But, hey, whatevs.
ParticipantI’m a little curious as to how you’re able to depreciate the entire price of the property as opposed to just the structure itself. Land isn’t depreciable. Is the land worth nothing? If so, you’ve got a very interesting property on your hands.
ParticipantI’m a little curious as to how you’re able to depreciate the entire price of the property as opposed to just the structure itself. Land isn’t depreciable. Is the land worth nothing? If so, you’ve got a very interesting property on your hands.
ParticipantNope, no kids. I don’t really have any interest in kids. I’d be a horrible father. I’m too selfish. I have no nesting instinct whatsoever.
Actually, Slim’s father was extremely wealthy so he had a lot of capital to start with. Also, he was very well-connected politically which helped in his winning bid for Telmex from the Mexican government, which is the largest portion of his net worth. Also, he got to pay the purchase price to the government over a period of years with the earnings from Telmex – nice terms if you can get them. He’s a real operator. Don’t get me wrong – Slim’s done well; that’s stating the obvious. But most of his wealth stems from a set of advantages – prior wealth and political connections – that most will never have. I have a lot more respect for Buffett.
I’m in the middle of a private deal in Mexico right now so I’ve heard lots of sordid stories about Slim, Hank and the other Mexican Plutocrats… the corruption down there is truly staggering. And they’re mostly Catholics. Go figure.
Like you, I’m hoping to see lower asset prices as well. It would be good for the pocketbook as well as the long-term stability of the system. Until then, perseverance rules the day…
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