Author Topic: Is buying low P/E stocks the equivalent of buying rental properties in midwest?  (Read 4575 times)

Gamecock-YT

  • Hero Member
  • *****
  • Posts: 691
Yield or growth? Not much different than the stock market. Like the stock market, there are in betweens as well.

+1

I think your best values exist somewhere in between.

Where is that place that's been low-priced for a while but maybe new infrastructure or new investment is driving green shoots of development? Maybe you'll be able to buy at a price where there is little to no upside built into the price but there is a reasonable argument that additional redevelopment hits your neighborhood in the next 5 years.

I would also make another comparison to the stock market in that its not a housing market as much as it is a market of houses. Everyone has different motivations for selling their home/property so if you can identify a seller who prizes liquidity over the best price, you can get a deal. Maybe not at this exact moment in time with the way the market is, but in general things don't move so fast that you can't find people who need liquidity.

I recently advised my friends to buy a house in a certain part of Charlotte where 2,000+ sq ft homes were selling for less than $250,000. The area recently had some new infrastructure (a transit rail) put in, there has been some early momentum in prices in the area, and you can see some evidence of people renovating or flipping homes. It also is an area that has historically been considered a bad part of town, and I wouldn't be surprised if you see suspicious characters walking the main roads sometimes and maybe the shopping in that immediate area isn't that great but you're 15 minutes from downtown Charlotte. My buddy instead chose to buy a $400,000 home that had been renovated somewhat in a part of town that is not that great in my opinion, is farther from downtown, but is closer to other areas that have recently developed.

It's too early to tell who is "right" but I think many people are uncomfortable being uncomfortable. In real estate, your friends might joke around and call you a slumlord, and no one is going to look at the homes you buy and say "Wow" but these areas that are on the fringe of development have been very successful for me.

What part of town are you talking about? Where the gold line extension is going in?



Gregmal

  • Hero Member
  • *****
  • Posts: 5129
Yield or growth? Not much different than the stock market. Like the stock market, there are in betweens as well.

+1

I think your best values exist somewhere in between.

Where is that place that's been low-priced for a while but maybe new infrastructure or new investment is driving green shoots of development? Maybe you'll be able to buy at a price where there is little to no upside built into the price but there is a reasonable argument that additional redevelopment hits your neighborhood in the next 5 years.

I would also make another comparison to the stock market in that its not a housing market as much as it is a market of houses. Everyone has different motivations for selling their home/property so if you can identify a seller who prizes liquidity over the best price, you can get a deal. Maybe not at this exact moment in time with the way the market is, but in general things don't move so fast that you can't find people who need liquidity.

I recently advised my friends to buy a house in a certain part of Charlotte where 2,000+ sq ft homes were selling for less than $250,000. The area recently had some new infrastructure (a transit rail) put in, there has been some early momentum in prices in the area, and you can see some evidence of people renovating or flipping homes. It also is an area that has historically been considered a bad part of town, and I wouldn't be surprised if you see suspicious characters walking the main roads sometimes and maybe the shopping in that immediate area isn't that great but you're 15 minutes from downtown Charlotte. My buddy instead chose to buy a $400,000 home that had been renovated somewhat in a part of town that is not that great in my opinion, is farther from downtown, but is closer to other areas that have recently developed.

It's too early to tell who is "right" but I think many people are uncomfortable being uncomfortable. In real estate, your friends might joke around and call you a slumlord, and no one is going to look at the homes you buy and say "Wow" but these areas that are on the fringe of development have been very successful for me.

What part of town are you talking about? Where the gold line extension is going in?

What you are talking about might be sitting in St. Joe territory! Ive long owned shares, but no more. Ive flirted with buying some land out there, but haven't. That said, if you're looking for an inflection story, the Panhandle in FL is probably one of your best bets.

TwoCitiesCapital

  • Hero Member
  • *****
  • Posts: 2721
It's the difference of buying for income versus capital appreciation.

You may not get much appreciation in the Midwest, but cash yields ar healthy.

You won't get much in the way of cash yields on the coasts, but the capital appreciation has historically made up for it.

I find I am more comfortable with the idea of cash yields and expected flexibility that they provide when things hit the fan