Tag Archives: equialt alternative investments

The Influence of Buyers & Sellers on Supply & Demand
No matter what industry you look at, supply and demand always plays a large role. This is especially true of real estate and home prices. When there is a large inventory of homes for sale, pricing declines, while a lack of inventory will drive up pricing. This is usually how supply and demand works. However, there are times when a large supply of highly desirable inventory is paired with a large demand. When this happens, pricing may also rise. There are many factors that can play into this, such as the location of the homes. The more desirable an area, the more people will want to buy a home there, and even if there is a large amount of inventory, there will still be competition to buy the best of that inventory. Another influence on supply and demand in the housing market is the type of people...
If You Want to Predict The Housing Market, Go West
Back in 2007, it seemed as if the housing market crash would never end, and that foreclosures and decreased home values were to become the new norm. No place was this more apparent than in California, where home prices plummeted by about 42%. Slowly, though, the market began to recover, and California, as well as the rest of the country, began to see an upturn in the housing market. Today, however, affordable housing in California is harder and harder to find. It is estimated that only about a third of the population in California is now able to afford the costs of buying a new home. Why is this concerning for the rest of the country? Because California is actually one of the biggest indicators and predictors of what will happen in the housing market across the country. In other words, if housing prices are too high...
Crowdfunding Comes to Real Estate Investing
Today, individual real estate investors have more opportunity than ever to invest in income-producing property, thanks to a new rule  - The Jumpstart Our Business Startups Act of 2012 (The JOBS Act) – which ends an 80-year ban on “general solicitation”, allowing private firms and investment funds to broadly advertise securities offerings. Expect to see real estate sponsors giving it their all via the Internet, television, newspapers, and billboards…and, more importantly, keep your eyes and ears open to avoid getting swindled. What Spurred The JOBS Act? The JOBS Act came about as Congress pushed to promote crowdfunding as a means of raising capital. Crowdfunding is defined as the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. Currently, The JOBS Act allows only for private placement issuers to sell to accredited investors. Accredited...
Will Unintended Consequences of Dodd-Frank Make a Mess of the Mortgage Market?
The Dodd-Frank Wall Street Reform and Consumer Protection Act that passed was enacted into law in 2010, commonly referred to as simply "Dodd-Frank", is supposed to lower risk in various parts of the U.S. financial system. It was named after former U.S. Senator Christopher J. Dodd and former U.S. Representative Barney Frank because of their significant involvement in the act’s creation and passage. Dodd-Frank established new government agencies such as the Financial Stability Oversight Council and Orderly Liquidation Authority, which monitors the performance of companies deemed “too big to fail” in order to prevent a widespread economic collapse. Ultimately, the purpose is to protect consumers from the crazy home-lending excesses that caused the Great Recession of 2008. Banks are exiting from the mortgage business in large numbers, primarily because of the high operating costs and heightened litigation risks imposed by the Dodd-Frank financial-reform law. As banks...
Why Self-Storage is Good for the Community
The Wall Street Journal reports that there are currently 2.3 billion square feet of self-storage space in the U.S., which equates to approximately 7 square feet for each person in the United States. This includes the 8.9 million square feet added in 2012 and 16.5 million square feet expected to be available by the end of 2013. The downturn in the U.S. economy created a growth spurt within the self-storage industry among college students, densely populated city dwellers, shortage in demand, and households making do with the space they have instead of adding-on to their existing residences. According to documents filed with the United States Securities and Exchange Commission (SEC), Public Storage, the nation’s largest self-storage company, had 2,078 facilities in 38 states within the U.S. and 189 storage facilities in 7 western European nations. Not only is Public Storage large, but also profitable and growing....
Alternatives to the Stock Market Bubble
On Friday, November 8, all 3 of the major U.S. stock indices, the Dow Jones Industrial Average, NASDAQ, and the S&P 500, all closed at all-time record highs. As a whole, the U.S. stock market has been soaring recently, bringing untold ‘paper profits’ to millions of investors. However, there are people associated with the market that believe it to be significantly overvalued. Fund manager John Hussman points to the following measures in his weekly Hussman Funds Newsletter during the first week of November:
  • Cyclically adjusted price-earnings ratio (current P/E is 25X vs. 15X average)
  • Market cap to revenue (current ratio of 1.6 vs. 1.0 average)
  • Market cap to GDP (double the pre-1990s norm)
These are not just slightly overvalued indicators, they are grossly overvalued indicators. In his same newsletter, Hussman provides commentary that supports his claim that the stock market crash that is forthcoming will be extreme, somewhere in...
Second Trust Deeds
A second Trust Deed is also called a second mortgage and maybe referred to as mezzanine financing due to its subordination to a senior debt, but in the realm of private lending usually does not have an equity stake in the asset.  A second position Trust Deed is recorded after the first position Trust Deed and is second in all considerations such as payoff and payments to investors.  This significantly increases the risk of the investment for the investor. These loans are sometimes attractive due to the higher interest rate charged to the borrower and passed on the investor.  In many cases the second Trust Deed is offered as being ‘as secured’ as the first Trust Deed by the value of the asset with an opportunity to get a higher yield.  This is where PITFALL #4 becomes very important.  A potential investor in this type of...