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I'm Personally Pursuing Some of the Greatest Values I've Ever Seen

By Dr. Steve Sjuggerud
Monday, August 29, 2011

"What's so special about this one?" a lawyer asked me this week.
 
Some associates and I are looking at buying a bankrupt waterfront housing development from a bank, for pennies on the dollar.
 
It's an incredible property. And when you add up all that was invested, including roads and infrastructure, it literally is pennies on the dollar.
 
This lawyer specializes in real estate litigation – working out major bankruptcies and foreclosures. He's been a busy man lately.
 
We laid the map of the waterfront development out on the lawyer's conference room table.
 
"Steve, I could show you a dozen other bust waterfront developments from here to the Georgia border that are just like this one. Some banks are just desperate to get rid of this stuff at any price," he said. "Not all of them. But some, for sure."
 
The picture appears bleak in housing. "The housing market is showing little sign of recovery," the New York Times wrote this week.
 
But the reality is... if you want to buy any investment for pennies on the dollar, you have to be willing to buy when things appear bleak. That's why we're poking around at these deals.
 
"There is no indication out there that anything is improving," the New York Times said.
 
But take a look at this chart... What do you see?
 
 
I don't know about you. But I see a bit of an uptrend.
 
While the mainstream press is focusing on the negatives, I see positives...
 
In the last 12 months, new home prices are up 5%. (Yes, that's true.) Where was that on the evening news? People are ignoring it. They don't want to hear about it.
 
Also, mortgage rates are currently at all-time lows, around 4.25%. Where was that on the evening news? It's not news... because people don't want to hear about real estate.
 
Longtime readers know we size up investments on three criteria... We're looking for investments that are 1) cheap, 2) hated, and 3) showing the beginning of an uptrend.
 
We have the first two in place. After a near-50% fall in many cities and with record-low mortgage rates, housing is more affordable than it's ever been in American history. And most investors are gone – either through frustration or foreclosure. Real estate is hated. It's out of the headlines.
 
Most people are waiting for the day when the housing market looks "normal" again... when supply and demand are back in balance... when the price of a house is actually a reflection of the cost of the lot plus the cost to build.
 
But if you wait for that, you'll miss an incredible opportunity. House prices in most areas will likely be up 25% or more (possibly much more) once that day arrives.
 
You are in a position to make much bigger returns for yourself...
 
I'm personally out there now, actively pursuing excellent properties in my local area, at great values. I don't expect the banks to accept my offers. But how many other offers does the bank have?
 
You know your local area. You know which properties are truly "quality" properties. You know what to pursue.
 
The trend may finally be turning in home prices. With housing more affordable than ever, and mortgage rates lower than ever, we have incredible upside potential.
 
Housing is cheap, hated (as an investment), and we can see the glimmer of an uptrend...
 
We should be very close to the right time to buy... if it's not here already.
 
Good investing,
 
Steve




Further Reading:

Steve is personally invested in the real estate trend and has been following it for years. Learn more about what's happening in the sector here...
 
By buying yesterday, I didn't do anything you can't do. I just happened to get off my duff and do it!
 
Right now – today – U.S. real estate is the most affordable it's ever been. Ever.
 
Could mortgage rates in the U.S. fall below 2%? Don't be too hasty to say "no way."

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
Gold
Sturm, Ruger & Co. (RGR)... guns
McDonald's (MCD)... burgers
CF Industries (CF)... agricultural fertilizer

NEW LOWS OF NOTE LAST WEEK
 
National Bank of Greece (NBG)... European crisis
Bank of America (BAC)... banking
Citigroup (C)... banking
Goldman Sachs (GS)... investment banking
China Life (LFC)... China's largest life insurance company
Frontline (FRO)... oil shipping
American Eagle Outfitters (AEO)... clothing
AMR Corporation (AMR)... American Airlines
Human Genome Sciences (HGSI)... biotechnology
Arcelor Mittal (MT)... giant Indian steel company
Mechel OAO (MTL)... giant Russian coal and steel company
POSCO (PKX)... giant Korean steel company
Sterlite Industries (SLT)... giant Indian metals & mining company
Tata Motors (TTM)... India's largest automaker
Sony (SNE)... Japanese electronics maker

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