US constructions getting better: it is the right time for real estate investment?

Discussion in 'Buying & Selling Real Estate' started by WaveWage, Sep 28, 2015.

  1. WaveWage

    WaveWage Well-Known Member

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    When you are a bigger company, you can consider owning multiple parts of the supply chain, or rather let the original suppliers doing the work. But for small businesses, the dialog isn't that way. However, you can try to have a global look about the supply chain, or rather ask the "end" bound of the supply chain where you will purchase the product and sell/transform/market/manufacture it.


    What I means basically, is that you can let your supplier independent, you just give the constraints and let it sees with its suppliers where they can get the materials and products you need. You can also try to know the whole supply chain and "manage it", even if your power is limited.
    How would you play here? Do you think suppliers and factories are often on their own, caring themselves about their own suppliers instead of letting their clients telling what suppliers to choose?
     
  2. Corzhens

    Corzhens Senior Investor

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    When the construction was booming in the 1970s, a neighbor had invested in small condominiums - 3 storey with 10 units per floor. That neighbor is now very rich and has countless of rental units. I guess it is a wise decision to invest in real estate when there is a boom in construction because the cost of materials will go down. That's the experience of our neighbor who was coaxing us to invest in real estate at that time. Unfortunately, we didn't have that kind of money.
     
  3. WaveWage

    WaveWage Well-Known Member

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    The thing with real estate investment is that you are going to have always up-front costs. That's the thing. And if you want to do a loan, you need to have a good wage that stays for few years because otherwise you couldn't pay the loan and you will get into problems. So you can't start with these investments, it is more the kind of thing you can do if you have few hundred of thousands of dollars on your account. Well, it is not needed to be very rich, you can start to invest in smaller real estate and take the profit, but still.
     
  4. pwarbi

    pwarbi Senior Investor

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    Real estate does and always will involve upfront costs, and then you have to try and hope that the valuations on your properties increase. I think with housing and real estate, it can be a market they fluctuates dramatically sometimes between boom and bust, and a lot of people will look to invest in other more secure markets as they aren't willing to take a chance on the long term investment.
     
  5. baudwalk

    baudwalk Senior Investor

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    In my opinion a vertically integrated home builder company would be tenuous at best. My view of the so-called economic recovery is that it is barely limping along, subject to rather extreme regional dificulties. A failure of any step in the ladder portends problems requiring a resource distortion to fix. I would think that flexibility to put parts and work out to bid would be easier to manage so long as the company has a good bid spec writer. Yes, I know some home builders are well thought of, but the sector isn't for me. If I were to play in this arena, I think I would be looking at $HD and $LOW. (No opinion on either one or both; no due diligence done.) My thinking is that even in a flattening or downturn of new home sales (caused by interest rates or whatever) pepole will invest in their currently-owned properties.
     
  6. WaveWage

    WaveWage Well-Known Member

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    Sure, somehow, you have to count on the fact the property gets higher in the future, but don't forget building is less about the value of the land itself, but the current market, the predictions of the market when it will be built (that you can't really predict, you can just barely try). When you buy an existing property, the land value itself matters more and you try to expect a raise in the future. The building is rather the expectation that an empty terrain + the building costs are profitable, and that's the industry that are currently feeling better in the US.

    Just a theory about it: even if the economical situation isn't at its best, I think people are buying a newly built house as well to forget the history of other houses from 2008, a way to recover morally. That's a theory.
     
  7. baudwalk

    baudwalk Senior Investor

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    Wavewage, I answered your question thinking you were discussing the practically of vertically integrated construction firms. Reading your reply, I am totally confused. Sorry.
     
  8. Rosyrain

    Rosyrain Senior Investor

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    Homes and condos are going up like crazy where I live right now and I would love to have the money to purchase a couple and rent them out to others. I am not entirely excited over the fact of being someone's landlord though, as people can really mess you up if they have a burr under their saddle for you. I wonder if there are professionals out there that would take that task on and you just pay them a fee to maintain your home and deal with the tenants? One other thing I would like to do is to purchase an older home and flip it, but it can be very costly. I love taking something old and making it new again, but I would be afraid of losing money on the deal.
     
  9. Glcameron

    Glcameron Well-Known Member

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    There are quite a few construction companies in Virginia that mass build houses because the construction costs have lowered but I don't think that makes it better to invest in the real estate market. There are neighborhoods that are cookie cutter and look like they popped up overnight versus the family friendly, lived in communities.
     

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