Real Estate or Real Opportunities

WARNING!

THIS IS A WARNING. DO NOT BUY REAL ESTATE AT THIS TIME.

THINK ABOUT WHAT HAPPENED DURING THE 1930'S. WE ARE GOING INTO AN INFLATIONARY-DEPRESSION, HIGH INFLATION & HIGH UNEMPLOYMENT (Think 1979-1983) EXCEPT MUCH, MUCH STRONGER. Can you imagine what an inflationary depression is like?

Some may disagree with some of our points, but does it make sense to risk tying up dollars during periods of economic uncertainty? Especially when there are other opportunities specifically designed to PROFIT from what's coming?

We hear and speak to clients everyday as to whether now is a good time to buy real estate. We also have many discussions as to whether South Central America is a good choice if so. While many of our clients follow our thinking on this, there are some that either get emotionally involved in the thought of owning property offshore or are purchasing it out of fear that the US is going to collapse. In either case when they have decided to buy against our recommendations, they have come back with stories that we knew were coming.

These stories consist of clients having the lot right next to theirs discounted in order for the developer to stay afloat. By the way, these have not been small discounts. These discounts have been 30% - 50% below what they had bought at just a few months earlier. Most times these clients thought that they negotiated their lot and cost of construction down to a discount that couldn't go any lower. They just couldn't pass up "such a good deal." This was not the case.

We have other clients tell us about how the initial developer went out of business and now they need to bring in another one in which they have no relationship. Then others have delays due to a project not having enough liquidity to start the construction process, and once it is started, it gets stalled because of insufficient cash to finish it. Other delays are due to not enough of the units being sold--which of course means they will need to drop their prices which in summation means lost value to their investment.

Another example is where the developer was willing to carry the loan at no interest for the construction. A short few months later, that same developer / builder was asking for additional dollars to get started.

We could go on and on with those that did not follow our advice when buying real estate: onshore, offshore – it doesn't matter.

It is not only stories we receive from our clients that brings us to this determination. Those are all after-the-fact of us urging them not to buy. Our original recommendations were based on many years of experience and seeing these cycles repeat themselves... through an exhaustive and ongoing understanding of economic history and inter-personal relationships with those who are at the forefront of these transactions. This includes a developer in Central America who was selling primarily to Americans wanting to "escape it all." He confessed to us that he's had to drop his prices by 40%. He didn't want to do it because he had just sold a lot of property within the past year, but it was the only way to keep his company alive and continue to make sales. Even at his new prices, he has laid off most of his workers.

Let's take a look at some hard reasons why now is not the time to buy real estate:

• The real estate market has not bottomed.
• It still has a long way to fall yet.
• Do not tie-up your money into illiquid real estate during periods of economic uncertainty.
• It will be many years, perhaps 20 or more, before real estate values get back to even. (Think 1930's, when property sat idle for decades.)
• Anyone that believes in rising inflation and rising gold prices must believe in rising interest rates. People will only loan out their money if they can get their money back adjusted for inflation. This means devaluation per the most basic valuation formulas, just as what happened to the stock market. Except that with hyper-inflation it means a hyper-loss in values.
• We hear them all: all those commentators talking about real estate but they are merely commentators and are not economic historians. The inter-relationships and results are sure.
• There are too many opportunities to profit from what's coming. Why tie-up your dollars in sure-losers? If someone wants real estate, at least wait 3-4 years and then buy cheaper.
• Those on the inside of real estate also see the false signs, just as are seen in the stock market. You cannot have sharp devaluations of the dollar, and a rise in the real value of real estate simultaneously.
• Who's going to keep buying to prop real estate values up... as these commentators are all preaching to Americans, what happens when Americans discover the reality of economic collapse? And all retreat by pulling in their dollars? Where will the buyers be then? There will be no-one to prop up their values.

So you may be asking whether there are other opportunities out there? Absolutely. In fact we are most optimistic about the opportunities that are available.

For example, many think it might be a bad time to invest in an IPO. In stocks tied-to the rest of the regular economy, we definitely agree. In stocks that are contra-cyclical to the rest of the economy, they are liquid and are likely the opportunities of the decade, poised to outperform gold or silver by double, triple or more.

Think 1930's again. General Mills, General Motors, and others bought all their acquisitions for a song, and flew past Post cereals and Ford who had the big market share before then. There were more millionaires created per capita during the decade of the 1930's than during any other decade before or since! THIS is exactly where the opportunities are-- in businesses that are designed to profit from what's coming, who see what's coming, who have a unique story and will fill the gaps of those that will have to be retrenching because they don't know where to go.

In closing, there was a time when real estate was a sound investment--and will be again. It just isn't right now. Again we are very optimistic on the opportunities abound and we want to make sure that we keep our clients in the know. We're not suggesting our clients put their dollars anyplace where we aren't making our own investments. This is why you hired us. We keep you informed and give you access to not only our historical research but also experiences and established relationships that we are involved in. If you have additional questions, get in touch with our team of advisors--especially if you are thinking about purchasing real estate any time soon... Or, if you want to be involved where the real opportunities are at this time.

Take your pick: real estate, or real opportunities.