Pundits, consultants, advisors and\u00a0gurus are always looking for a signal as to which way to invest.\u00a0 They are looking for a sign so they can pass it on to their clients, friends or subjects.\u00a0 If they are getting paid to pass on their sage advice then the sign could be complex filled with algebra, calculus, charts and graphs.<\/p>\n
Maybe the signal to move in some direction is not readily apparent.\u00a0 Maybe it’s in the way the lint falls from his navel or how crumpled the cookies are coming out of the box or its in the tea leaves (time to dump the bags).\u00a0 Chances are the real signal comes from other pundits, consultants, advisors or gurus.\u00a0 They all start reading each others thoughts and before you know it they have complete consensus.<\/p>\n
I submit that there are some very simple signals and rules to adhere to. Three to be exact, much like a traffic signal.\u00a0 When the market starts going up and everyone is starting to get euphoric it is a clear green light go signal.\u00a0 Start buying until you see the happiness turn to unbridled giddiness then it is time to turn the burners down.\u00a0 During the green phase one is buying for growth and sellers being sellers they give the buyers\u00a0no choice but to buy short term, and turn the property to take\u00a0a profit.<\/p>\n
When the economy goes into free fall and the real estate market starts nose diving it may be prudent to wait until things make a change.\u00a0Stop for the red light.\u00a0This is now occuring in the residential market and anyone buying at this time needs to plan on a long term hold.\u00a0 If this is a home for them to live in then they will most likely be okay in the future but they can forget any short term gains.<\/p>\n
The commercial real estate market however is most likely in an orange light phase especially in Orange County.\u00a0 Prices are not plunging because owners are doing okay with their property, in general.\u00a0 But the prices are definitely softening.\u00a0 Sales are down but they are occuring.\u00a0 Buyers are still out there waiting for a sensible deal.<\/p>\n
During the slow down orange light phase one must buy for yield.\u00a0 The values of the properties can’t be determined for the coming years but if the tenancy is good and the cash on cash return is good there are reasons to take the jump into the market.\u00a0 The primary reason is that inflation is rearing it’s ugly head and the best way to offset the effects of inflation are by putting your rapidly depreciating cash into hard assets.<\/p>\n
The all time winner of hard asset investing is real estate.\u00a0 At this time in the market it is commercial real estate that has been bought well.\u00a0 It is still difficult to buy Orange County commercial property with a good cash flow.\u00a0 However, as sellers become more motivated to sell they will see the light.\u00a0 Hopefully it will be the orange light demanding the deal be structured to yield a nice cash return.<\/p>\n","protected":false},"excerpt":{"rendered":"
Pundits, consultants, advisors and\u00a0gurus are always looking for a signal as to which way to invest.\u00a0 They are looking for a sign so they can pass it on to their clients, friends or subjects.\u00a0 If they are getting paid to pass on their sage advice then the sign could be complex filled with algebra, calculus, […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[39,41,82,124,138,185],"class_list":["post-28","post","type-post","status-publish","format-standard","hentry","category-commercial-property-prices","tag-cash-flow","tag-cash-return","tag-inflation","tag-orange-county-commercial-property","tag-real-estate","tag-yield"],"_links":{"self":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/posts\/28","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/comments?post=28"}],"version-history":[{"count":0,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/posts\/28\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/media?parent=28"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/categories?post=28"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/tags?post=28"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}