All Forum Posts by: David Greiner

@David Greiner its your personal opinion, I don't think its fine to say no one wants to live in Detroit or there wouldnt be a many projects as it is in Detroit. I live in Detroit and have properties in Detroit that has no issues with the neighborhood or anything. NO Detroit is not for everyone, half of the population isn't mentally fit to deal with the what it takes to hustle, grind, and to make it from Detroit. Literally when anything bad happens in Michigan it happened in ""Detroit"" but nothing is mentioned when the 1k other positive things happens. Anyone in Michigan will tell you when you want to have a good time and enjoy the night out with friends from out of state they come to Detroit. Our downtown light life is like no other. 

@Jay

Poor Jay... First off I’m not a realtor not that there is anything wrong whatsoever with being a realtor. I sure hope your not being misogynistic b/c you sure are being judgmental and borderline piggish. “This lady who is posting is obviously a real estate agent so by the time she gets her.... etc etc” Have some manners please sir.......My fiancé and I are Investors, developers and wholesalers.

Secondly, I’m sure all a big talker like yourself saw were the big player inventory and big player price tags that your ‘big player’ company wanted you to see. We are much more of a boutique operation/team who run hard with our boots on the ground team who do serious digging and are able to acquire properties that we purchase or put under contract or sell well below market. So much so we can put a little in our pockets and still pass along some of those hard earned savings to our client.

We have a property at this minute we are closing on that’s located on the cusp of Grandmont-Rosedale (a VERY B+ area. Just ask any resident of Detroit or fairly sophisticated Detroit investor.) for 45K that has a longtime, never late all cash tenant paying $925 who is employed by Ford Motor Company.

We also are in the process of putting under contract a GORGEOUS SFR in Morningside that is an ultra hot B neighborhood (ask any sophisticated or Veteran Detroit investor.) The tenant is paying $950. We will be selling it for 50-55K!

Another one we are closing on this week on the edge of Redford we just sold for $49K that will Rent for $950 all day long. Redford is also a highly appreciating neighborhood that is a very B type area for the most part. The address we are selling most certainly is.

We have another one on the nice side of Littlefield that is rented at $900 that we will be selling for 60K.

And besides if you read the entire post and all the facts that a naive big player wannabe like yourself should have done you would see that the post revolves not just solely on the fantastic priced properties and rent to value ratio we have and those in the know have been experiencing but around Detroit’s MASSIVE Rebirth and explosion of growth that is undisputedly taking place.

Nationally, home sales are down 8.6%,

but in metro Detroit, home sales are up 7.9%.”

—ABC Detroit WXYZ.com

•“Detroit outpaced the national average in many key areas including (GDP) and per capita income. Last year alone, per capita income rose by 4.3%.”

—State of the region report 2018-2019.

•“Detroit among the best places to Travel 2019.”

—ABC Detroit wxyz.com

•“Detroit has recovered, and the region’s future looks bright”

—Detroit Regional Chamber

•“Last year, Detroit saw the largest year-over-year gain for educational attainment since the recession, with an increase of 1.2%.”

—2018-2019 State of the region report

•“The city is now one of the hottest national markets for stadiums, office, retail, residential, industrial, restaurants, and mixed-use development.“

—urbanland.uli.org

•“Detroit ranked third for permit growth among peer regions, with a residential construction growth rate of 58.8%.”

—US census bureau

•“The new Amazon Detroit distribution center occupies more than 855,000 square feet, about the size of 14 football fields.

—Michiganradio.org

This spring is shaping up to be another sellers' market in metro Detroit housing as would-be buyers continue to scramble over the slim number of for-sale houses. Especially those with entry-level prices.”

—freep.com

•“Metro Detroit is among the top five financial centers in the U.S. that have all of the big four accounting firms.”

— Wikipedia

•“Multifamily investors continue to focus on Detroit suburban Class B and Class C assets, with acquisition yields hitting double digits.” —Multihousingnews.com

•“The metro added 28,000 jobs in the 12 months ending in July, more than half of which were in the leisure and hospitality (11,200) and construction (4,000) sectors. Both grew more than 5.0% year-over-year”

—Multihousingnews.com

•“Over the last five years, the Detroit real estate market has been one of the fastest growing real estate markets in the U.S. Here investors can get a better cash flow return and enjoy awesome capital appreciation compared to other cities” —Strategy

•”Residents are moving into homes and using office space in Detroit’s walkable neighborhoods at nearly six times the rate in 2018 as they were in 2010.”

—StreetblogUSA

DON’T HATE ... APPRECIATE :)

I'm afraid people are making a huge mistake of seeing the next recession as binary, if x happens then y happens because they're inversely correlated.  In other words, if a recession hits (x) the value of my cash increases or housing prices go down in terms of dollars (y).

While this is possible, it's not guaranteed.  History shows us steep recessions and depressions rarely occur for reasons people expect and rarely unfold the way people imagine.  They have a saying "the market will do what ever necessary to hurt the most amount of people." 

Let's first look at a very meaningful chart of government deficits.  Notice deficits usually rise during recessions and contract during booms, and never before in US history, have deficits been this high (4.6% of GDP) without being in a recession.

This means the US is currently running recession level deficits, only seen twice since 1950, at a time when the economy is "booming" and unemployment is near an all time low, as Trump reminds us via twitter by the hour.  

And remember the US is at almost 110% debt to GDP, a feat never accomplished outside a world war and not seen since the early 1940's.  This is extremely important because a war is a one time expense, like buying office furniture.  The deficits now aren't one time expenses, they're recurring, like payroll. 

Going back to the chart please notice the last recession the deficit increased by approx 9%.  

So what happens when we're currently running a 4.6% deficit in a good economy, with very low unemployment, and the next recession hits?  Above 50% probability the deficit goes north of 10% of GDP.  But wait, debt to GDP is already at levels only seen in war when it's a one time cost.  

What happened to the national debt during/since the last recession when we've run deficits between 10% and 2%?  Here's another chart.  

 The national debt more than doubled.  So what would the national debt do in the next recession if deficits stayed consistently at or above 10%.  The debt would likely double every 5 -7 years...optimistically.  

What does this have to do with the original question, "would you like to see a recession?" 

It has more to do with everyone's answer 1. No I'm not a masochist or 2. Yes, I'd like a recession so my cash buys more house.

But what if the next recession wasn't binary?  What if there's a 3rd possible outcome? 

Let's look at the 1970's and stagflation.  This was an inflationary recession, high inflation with high unemployment.  American's cash lost 50% of it's purchasing power in 5 years.  The US had to issue "Carter Bonds" (bonds issued in swiss francs) because no one wanted bond's denominated in the pariah currency of the time...the US dollar.  

What happened to housing prices?  See chart 

Even adjusted for inflation, they rose.  

I'm by no means suggesting you run out and buy properties now because there's no downside.  Far from it.  What I am saying is with staggering national debt, huge deficits (in a "good" economy), and the only out for the government being inflation, in the next recession, 1970's inflation has a lot of tailwind.  

And if you're holding cash, waiting for the next recession, you'll get crushed.  Imagine loosing half the your money in 5 years waiting for home prices to come down.  

In an inflationary recession cash is far from king.  

I think I'm one of the very few investors on BP that look at REI from a top down perspective, so just wanted to provide some food for thought for the rest of the community who looks at things bottoms up.

George 

@Jay Hinrichs @David Greiner Ann Arbor was actually comparatively solid during the recession. Probably the best place in the state to have owned during the downturn.