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Personally, I'd spend more time trying to understand what was being said, rather than looking for insult...but that's just me.
 

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^^ When you give your examples of the doors you buy, you don't include maintenance costs, only 5000 grand or so to update a new door. But your door is in a building with long term maintenance costs to keep it standing. If you don't control the building, it could fall into disrepair and your door becomes a tear down.

Stocks have an intrinsic value, and a market price. there are times, such as panic selling, when the market price is below the value. Sometimes holders of stock panic sell due to simple fear, they need the cash to pay debt, and redemptions from funds.
 

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I actually read this thread, and while you both make good points... JaG you’ve been successful with RE and need to agree that a lot of folks wouldn’t be, regardless, as interest rates increase real estate may depreciate leaving owners holding undervalued properties. AR you see the critical mass and risks of RE very clearly, I think that vs equities / bonds both pose risks and most investors aren’t using margin (similar to mortgage/debt) so traditional investing will pose less risk but possibly less reward to.

Regardless of RE and having a mortgage or stocks/bonds and using margin for more, you have risk in the debt. With RE you usually need debt to do it but with stocks/bonds you can start with $1.

I think RE and wall street BOTH have been so manipulated over the last 10 years that neither are very stable given our current situation with rising rates and central banks globally starting to tighten. The economy has been on steroids and any idiot was able to make money.... (including me) The next 5 years will thin the heard.... RE or stocks/bonds.
 

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I think RE and wall street BOTH have been so manipulated over the last 10 years that neither are very stable given our current situation with rising rates and central banks globally starting to tighten. The economy has been on steroids and any idiot was able to make money.... (including me) The next 5 years will thin the heard.... RE or stocks/bonds.
I agree that going forward is going to be tougher in both capital and RE markets. The US Fed had 3 rate increases this year so far, say there will have one more in Dec, and are signalling 3 for 2019. Either the yield curve is going to invert and bring on the next recession, or the whole yield curve will shift upward. All that cheap debt is going to get significantly more expensive. Households, corporations and government are all so indebted, it is going to have an impact in all markets.
 

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First off, it’s usually very easy to get control of the building simply by joining the condo board. Most people can’t be bothered, especially owners (as opposed to investors), which I find a very sad statement.

Many of the properties I’ve bought lately have been mismanaged, and take time to turn around, but it’s usually not hard to do if you appeal to others with the “we’re going to improve the building” line.

I don’t ignore the maintenance costs, you’re right that I don’t mention them often, but they all fall within an acceptable range when I’m making my decision. It’s an automatic part of the cash flow equation (sorry, some things are so natural that I don’t even consider bringing it up anymore). Most of my building range between 300-500 a month.

Personally I prefer special assessments to higher condo fees as I can put my money towards other projects instead of it sitting in a reserve fund. That being said, I like to have a couple grand per door in a reserve fund as well.

Real estate does have more ongoing work than stocks, but neither is a buy and forget investment if you’re serious.

As for real estate and debt, making money in real estate is based on debt, you want to have debt, that’s the power and where the money comes from. Without the leverage, returns on real estate are generally quite poor. I don’t think I’ve ever said real estate investing is for everyone, but I also don’t think stock investing is for everyone, nor running a business...

No investment is particularly “safe” if you don’t approach is properly. I know people who’ve lost their shirts in every kind of investing, all the way to bankruptcy...I’ve also known people who’ve made, and kept, millions from all types of investing. No method is particularly easy and none of them is a sure thing. Most people have, what I call, an investment personality which dictates the strategy they’ll need to use to be successful. If you go against that, chances are you’re going to lose.

I agree, the next few years could be some interesting times...one difference is, in real estate you can buy in at tomorrow’s lower prices today (if you’re lucky). Something you can’t really do with stocks. It’s been easier to do this year than ever before, which tells me the end is getting nearer.
 

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...one difference is, in real estate you can buy in at tomorrow’s lower prices today (if you’re lucky). Something you can’t really do with stocks. It’s been easier to do this year than ever before, which tells me the end is getting nearer.
Thanks JAG. Which end are you referring to? RE bubble? Stock market?
 

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one difference is, in real estate you can buy in at tomorrow’s lower prices today (if you’re lucky). Something you can’t really do with stocks.
Yes, you can as many, including Pluto above, have articulated it well over time. It is just on a different time frame with stocks than it is with illiquid assets such as RE. A current stock example is CTC.b It's intrinsic value has not changed in the last two months but its market price certainly has, down from $180 to $155. Market perception changes on future cash flows affect both types of investment. I wouldn't buy investment RE today due to mortgage rate increases unless market prices come down to offset perceived rate changes in the next 12 months or so.
 

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Thanks JAG. Which end are you referring to? RE bubble? Stock market?
I think both are overdue, at least the numbers seem to indicate it. The problem is, as was so eloquently stated, markets can remain irrational longer than you can remain solvent.

I’ve outlined why I think interest rates will trigger the fall of real estate, now interest rates are rising, we’ll see if my theory holds up.

Alta, I think you keep missing my point. The stock market price, IS the price of the stock today. You may think the market is undervaluing the stock price, but the market disagrees, your personal opinion doesn’t matter in the stock market. You can’t buy CTC.b today for $75, the market says its worth $155 period. In real estate however, a two bedroom in the same building may sell for half of what another unit did on the same day. There is no market price that says this is what a place will sell for. One person may have overpaid, maybe neither did, one just got a better deal, maybe they both overpaid in the long run (that’s where knowledge comes in handy).
 

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In real estate however, a two bedroom in the same building may sell for half of what another unit did on the same day. There is no market price that says this is what a place will sell for. One person may have overpaid, maybe neither did, one just got a better deal, maybe they both overpaid in the long run (that’s where knowledge comes in handy).
You can only buy at half the price if there is another identical unit willing to be sold for half the price the same day, week or month. Market prices for a stock vary all day too, sometimes significantly. Market price is what 2 parties are willing to do a transaction for, whether RE or stocks. The only difference is frequency and degree of variation. Not sure why you keep on insisting otherwise but it seems very much being dug in on your own form of reality. We will obviously never remotely agree.
 

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... The stock market price, IS the price of the stock today.
You may think the market is undervaluing the stock price, but the market disagrees, your personal opinion doesn’t matter in the stock market ...
To the market, no ... the market may change it's mind to be more of what one thought when buying.


Cheers
 

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Anyway, as to the origional question, I think people have too much in real estate. No balance.
JAG appears to endorse the effecient market view, where the (stock) market is always right, so you can't get bargins in stocks. But the real estate market has ineficiencies, enabling him to buy bargins. Oh well, the debate goes on.

The best bargins in stocks I got were compaines who were growing very rapidly, but the p/e hadn't expanded to match the growth yet. These are available from time to time for those who are looking. Those whose attention is on finding the next door - and there is nothing wrong with that - are not going to find the bargin stock as their attention is not on that task.
 

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I’m not arguing that the market can’t be on sale, heck that’s when I buy stocks. My argument is, on a given day you can’t buy a stock for less than market price. The market may undervalue the stock, but that is the price, you won’t get it for much less (unless the stock is in free fall). For example, you can’t buy Apple stock today for half market price, it will NEVER happen. In real estate however, there is a chance that it could happen. That was my only point.

I never said the market was correct in its valuations I just pointed out no one would sell for half price when they can click a button and get full market price. In reals estate, you get what someone is willing to pay at the time. If you need to sell, you’re going to sell cheap sometimes and won’t get market price.
 

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The advantage to investing in the stock/bond market is you invest what you have... in RE usually you need to saddle up with a bunch of debt....

Depends on the person with the cash what they are good with - both can work, but they both have their devils and pit falls.....
 

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The power of real estate investing comes from the debt. That’s how you convert the relatively small gains into huge profits. A paid off property makes very poor gains usually, that’s why a home is a poor investment. The leverage is the key, but also the downfall if misused.

Debt is a tool, not good or evil. If used properly you can build something nice, if used improperly, you can cut off a limb or kill yourself.

With stocks, of course, you can also use leverage in the form of a margin account. The lending amount tends to be much less than real estate, probably because actuarials have determined that stocks are usually more risky than real estate.
 

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^^
I guess I'm having trouble with how you define "market price". You seem to be using two different meanings. For stocks "market price" is the price the stock sells for, according to your usage. But in real estate "market price" seems to mean an evaluation of what it should sell for, not what it actually sells for. Given these shifiting meanings, I see your point, but if you apply the same meaning to both stocks and real estate, I don't get your point.

In stocks many value investors claim to ferret out stocks that are selling below what they are worth - the "market price" is lower than its worth/value. That's the same thing you claim with apartments: I bought a door (market price=what it actually sells for, in this case what you paid) below what it is actually worth (your evaluation of its worth).

Supposing Bob says, "I bought a property below market". The meaning of "below maket" is really vague, since the "market" is defined by what properties actually have sold for.
 

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^^
I guess I'm having trouble with how you define "market price". You seem to be using two different meanings. For stocks "market price" is the price the stock sells for, according to your usage. But in real estate "market price" seems to mean an evaluation of what it should sell for, not what it actually sells for. Given these shifiting meanings, I see your point, but if you apply the same meaning to both stocks and real estate, I don't get your point.

In stocks many value investors claim to ferret out stocks that are selling below what they are worth - the "market price" is lower than its worth/value. That's the same thing you claim with apartments: I bought a door (market price=what it actually sells for, in this case what you paid) below what it is actually worth (your evaluation of its worth).

Supposing Bob says, "I bought a property below market". The meaning of "below maket" is really vague, since the "market" is defined by what properties actually have sold for.
 

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The problem, as you seem to be coming to terms with, is there is no clearly defined “market price” in real estate. Each property sells for whatever the seller gets. If you take a wider view, you can claim a general “market price”, but it’s not the same as the clearly defined market price of stocks because it’s just an average of the selling prices.

In real estate you can often buy a single property well below market average (if you prefer that term), but you can never buy a stock for less than the price at the time of the market (plus or minus a little daily swing), even value stocks all sell for the daily price.

Something else to consider with real estate is you May have some control over the price of your asset. You can renovate and potentially increase the value above the market average. Again, unless you run a pump and dump scam or try to corner the market, or maybe ruminate on taking your company private, you are at the mercy of market price with stocks.
 

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What you are emphasizing is that stocks are immediately liquid and RE is illiquid, making transactions different than market value possible. RE depends on timely honesty is reporting sales to establish current market price. And the people reporting the sales are not motivated to be timely nor accurate.

Recognizing that fact creates opportunities like JAG has emphasized.
 

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The general liquidity of capital markets simply makes the opportunities different in style and timing, albeit illiquid stocks, including many prefs, require one to be more opportunistic. RE is the same thing, opportunistic, finding the right buyer (or seller) at the right moment in time. It is simply a matter of degree. To argue anything differently so just demonstrates unabashed bias, hyperbole and non-objectivity. There is no holy grail on any investment opportunity, just patience, time and acumen.
 

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I don’t think anyone was ever implying one form or asset is better than any other. What I was trying to say was real estate is different than stocks in a couple of ways. I was just pointing out some advantages, there are also many disadvantages like illiquidity and high costs which require time to recover. To assume all markets are the same is equally foolish. Different markets, different strategies, different products all require you to understand the differences to be successful.
 
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