All Forum Posts by: Max Householder

IMO "real" tangible assets like gold, silver, land, and cash flow real estate are something you should be buying all the time. Now that's not to say that you should buy at any price, but if you want say 25% of your net worth to be in real estate, then find the best real estate deal you can that fits your criteria/goals and buy it. Then do it again until you reach your desired allocation. Then wait. Add more if your allocation shrinks below your desired level or if there is a correction and lower prices tell you it's time to be overweight real estate beyond your initial goal.

Don't think about real estate the same way as stocks or ETFs or other "paper" assets that you can buy and sell multiple times per day. Real estate is a true diversifier, so don't worry as much about catching the bottom. The whole reason you like cash flow real estate is because the tenant pays your mortgage for you and that'll continue to happen whether the sticker price of the building goes up or down 10% in a year.

If you like the investment thesis for cash flow real estate and really want to "buy and hold for the long term" then it won't matter whether you buy at today's price or next month at 98 cents on the dollar or next year at 110% of today's price or 2 years from now at 75 cents on the dollar. Ideally, buy one every year and you'll average into the market.

Now if you're going to flip the property or something more short-term then your thought process should be much different.

Strictly opinion here, I am not a financial adviser or fiduciary or anything of the sort, but when I look at the current set-up for inflation over the next say 10-20 years, I think there might not be a better time to be buying cash flow real estate on fixed-rate debt than right now. Obviously don't over-leverage yourself and every local market is different (jobs, population growth, rental prices, etc.), so do your due diligence on the near and mid-term prospects for every market, but in 30 years I think you'll be jumping for joy that you let rapidly inflating rents pay down your properties over time and protected your purchasing power.

Buy gold.

@Peter MacKercher is your guy, @Blair Treu.

History doesn't repeat, but it often rhymes. Don't focus too much on fighting the last battle, i.e. asking when "the next 2008" will be. There will be another crisis, but the nature of it will be far different than in 2008. Since the 1980s (really since 1971 going off the gold standard), financial markets (stocks, bonds, and real estate) have been greatly influenced by Central Bank manipulation of interest rates and other extreme monetary policies. This paradigm is coming to an end and there will be massive changes to the world financial system over the next decade. IMO these changes will be first and foremost about the US dollar's role as the world reserve currency, but there is much conjecture in this space. I think a good strategy no matter what, since pretty much everything is "overpriced" by traditional measures, would be to "get real" by owning tangible assets such as gold and real estate rather than financial "paper" assets like stocks, bonds, REITs, etc.

That isn't to say overpay for real estate, but in the next crisis I'd rather be sitting in cash-flowing real estate than stocks or bonds. Especially if Central Banks get their wish and finally create inflation, cash-flowing property with fixed rate debt will be like gold vs. holding cash or almost anything else.

Just my $0.02

St. Louis has many small pockets of growth/turnaround/gentrification, but overall I would expect it to stay steady as she goes. Anecdotally, I know many millennials who have enjoyed city living for the last 10 years starting to shift toward St. Louis and St. Charles counties as their families grow and they start to think about schools which are largely not an option in the city if you can't afford private school. Conversely, some recent empty-nesters are moving into the trendy areas of the city (Central West End, etc.) in order to downsize now that kids are off to college so there's kind of a flip-flop going on there that should net out as a wash.

As long as major industries/business HQ don't all bail on St. Louis at the same time, the low cost of living and manageable climate plus proximity to many US business destinations (4 hours by car to Chicago, Indy, Nashville, KC, Memphis, etc. or 2 hours by plane to Dallas, Denver, Atlanta, etc.) should keep a stable base population in the metro area. Being at the confluence of 3 major rivers (Mississippi, Missouri, Illinois) is an asset that is unlikely to ever become obsolete as well.

I've seen some research that indicates younger people are starting to leave high cost coastal cities and move back to the middle of the country (mostly Texas or Colorado for now) and St. Louis has a lot going for it in regard to food culture, cost of living, etc. that young people desire. We can all hope for a boom but it's probably more tortoise than hare. 

I second Shelter Insurance. We work with Eric Brand.

@T Smith You will have to be more specific to find out "what happened". What areas of the city are you looking at? I am assuming north city. There is little demand for housing in this area because the population continues to decline. There is little business and crime is high. It is a D area at best. Like Kyle said, many areas of the city are seeing an explosion of investment and business and people are flocking there, driving up prices in a low-inventory market. All major urban areas have pockets that get left behind over the decades and for St. Louis that is North City which covers a rather large area. If you're only looking at sub-$50k listings then St. Louis can seem like a barren wasteland, but you just need to look elsewhere in the city. It'll be much more picked over for sure, but you have a lot of adjacent positive pressures in areas like South City.

Hi Mark, St. Louis has something for everyone somewhere within the metro area. The key is to understand what strategies to undertake in the different parts of the county, city, neighborhood, or even the city block that you target. Take Donald's response to heart; you really need boots on the ground knowledge for much of St. Louis, especially in the city where rents can vary from one side of the street to the other.

There's no such thing as a "safe" investment, it's all a matter of analyzing the trade-offs between risk and reward.

Our PM @Peter MacKercher does a great job for us on our two 4-unit properties and he is a wealth of knowledge on the St. Louis City market.

St. Louis is a great town. I live and invest here and it works if you buy right. It does have its issues. Local government is crap and the city/county split is a contentious issue that causes a lot of problems, but so would a unification. Crime is a problem in many areas. Violent crime is generally only in a few very bad pockets, but petty crime and theft and break-ins are common. You really have to get to know the city well. You said "near St. Louis" for this job, is that like St. Charles or on IL side or in the city somewhere? I would recommend living close to where you invest, especially for a newbie.

I have never been to Omaha, but it is an underrated city. There are several Fortune 500 HQ there, including Berkshire Hathaway, Warren Buffet's company. You also have the College World Series and the Berkshire Annual Meeting are HUGE tourist draws. People also think of Nebraska as flat plains, but over there by the Iowa border there is a fair amount of topography and outdoor recreation to do. I have a friend who lives in Council Bluffs and they love it there as far as I know. Consider the differences between Iowa and Nebraska as far as taxes and whatnot before you decide where to live and invest since you would likely be able to do either or/both.