Hopeful

It's the first week of 2012 and I am in hopeful mood.  After a very long time, I am starting to plan again for future real estate investments. A Reno real estate blind faith, you are probably thinking.

I disagree.

To be specific, I am starting to be bullish on some price ranges, not on the whole Reno real estate market.  To put it simply, I am hopeful on real estate investments that can sustain itself through cash flow.  Not speculative equity nor am I insuating a market bottom is in sight.

Think Warren Buffet in the last quarter of 2008 -- investing a $5 billion vote of confidence in Goldman Sachs -- just around the precipice of the biggest Wall Street breakdown in the last fifty years.  Even I questioned The Master. At that time.

"Berkshire Hathaway will receive warrants to buy $5 billion in common stock at a strike price of $115 a share, which can be used at any time in a five-year period."

"Berkshire Hathaway will receive perpetual preferred shares in Goldman, which will pay a 10 annual percent dividend, or $500 million a year. Those dividends take precedence over other payments to common shareholders. Goldman has the right to buy back the shares at any time for a premium of 10 percent. "

Goldman shares closed at $125.05 the next day, up $4.27, and rose to $134.75 in after-hours trading after Mr. Buffett’s investment was announced.

(Note: current Goldman stock price is $93.42) 

But hardly a "bad investment" in my opinion.  This is a long term, value investment that already gave 10 annual percent dividend, or $500 million a year.  (I'm not sure if Goldman already bought back shares.)

Nevada is experiencing a dull economy headlined by the highest foreclosure rate in the country but amidst the blazing fire are some signs of sparks of life, specifically in the residential rental market for "apartment like rates" ($1,200/month and below). 

Occupancy has been steadily rising the last six quarters and for me this is proof that people are, by and large, still choosing to stay in Reno.  Yes, for the most part jobs are low paying, but that's why I like the residential starter home market -- more demand.  Less risk.

And the inventory is astounding.  Have you seen prices of condos in Reno-Sparks lately? Do I have to go in detail how to make money off of those sweet things? (If yes, send me an email.  I don't want to stand on the roof top and water it down.)

"People hope when it's time to fear and fear when it's time to hope."