Jake Bernstein & Jordan Wirsz

Transcription

1 Jake Bernstein & Jordan Wirsz Real Estate Market Update & Forecast The Generational Opportunity that most will miss. Jake Bernstein and Jordan Wirsz ***Please do not share this material with anyone who did not attend. This information is copyrighted and is prohibited from distribution to unauthorized parties. This presentation may not be recorded, duplicated, or shared without written consent. September 19, by Jake Bernstein & Jordan Wirsz

2 Introduction and overview by Jake The facts are simple: Jordan and I have been very right on real estate more so than most Experts and analysts My work turned bullish well before the lows and I gave specific buy recommendations in such stocks as LL, VNQ, JRS, RYL, PHM, KBH, and REITs and others all of which made huge moves Jordan was spot on as he will show you Are the moves over yet or is a new wave beginning? My work in synergy with Jordans Technicals and fundamentals Cycles and pragmatics What s next? Boom or bust? We will do our best to give you continued profitable guidance

3 Topics today Status of the long-term US real estate market Status of foreign real estate, particularly Asia and Australia Current opportunities in specific US areas Farmland trend and price projections REITS: buy, sell or hold? 6 Housing stocks for the long-term; when and at what prices Interest rate mortgage rate projections: lock in now or float? 5 Real estate related ETF'S and stocks hand-picked for the next secular upmoves

4 Underlying Issues Interest rate cycles yr low When? next low Real estate cycle (Jordan will show) Economic cycles 3-4 year business cycle up Inflation and interest rates Is a bubble likely? Lumber cycles Farmland Buying into the current decline Examples charts - recommendations

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14 Farmland play SA

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17 My goals My presentation goals: First and foremost to serve your investment goals To give you good, sage, objective information based on my knowledge and experience To give you fundamental and technical indicators that cannot be denied To give you enough information for you to make your own decisions To help you profit from this information

18 Disclaimer 1. These are my opinions based on my experience and research. 2. I am not giving you any financial, legal, or other advice. 3. There are many factors to consider when analyzing real estate markets, not all will be covered here. 4. Be smart, diligent, come to your own conclusions, make your own decisions, and use caution as any smart investor does. 5. My opinions may differ largely from what you see on CNBC, read in the Wall Street Journal, or hear from your friends. That is precisely why we are successful investors

19 My Previous Forecast (Predictions) Late 2010/early 2011 I forecast that the major market low was in place. Outcome: Correct. In October 2011, I forecast sinking inventory levels and increased demand, suggesting people buy residential real estate. Outcome: Correct. In January 2012, I forecast rising interest rates in the next months. Outcome: Correct. (150 bps) January 2012, I predicted that the residential real estate sector would be the fastest to recover. Outcome: Correct, and AHEAD OF SCHEDULE.

20 My Previous Forecast (Predictions) In 2011, I predicted that institutional money would flow into real estate like never before. Outcome: Correct. In 2010/2011, I predicted that Las Vegas, Phoenix and parts of California and Florida were the best places to buy. Outcome: Correct. In 2012/2013: I am predicting that the commercial real estate market is the next market to recover, and soar! Outcome: Pending. I am now predicting that real estate will be both a SHORT TERM and LONG TERM asset that you will want to own!

21 The Cycle

22 The Cycle Where we ve been. Where have we been? Lets use LAS VEGAS as an example. At the bottom, you could buy a residential home for between $45-75 per foot. (Area and quality dependent of course) Inventory was at an all-time high. Prices were down as much as 80% from the highs'. Prices were ½ of replacement cost. (this is an important #)

23 The Cycle Where we are TODAY. Where are we today in LAS VEGAS? Prices have doubled from the bottom of the market. (still 40-50% from old highs) Prices are still less than replacement cost in many areas. ($85-100/ft.) Homebuilders are building again, and charging 15-20% premiums over pre-existing homes. Bidding wars amongst buyers is common. Inventory is low. (currently less than two months supply on the market in Las Vegas) People who thought they were underwater on their mortgages are now realizing that they are not any longer. Loans for buyers are becoming more available, banks are dipping their toes back into lending again. And Obama is making sure that FHA is financing mortgages for people with foreclosures as recent as 12 months ago!

24 The Cycle Where we are TODAY.

25 The bubble we experienced

26 What happened to prices in the last year? Las Vegas Appreciated 24% last year. Phoenix appreciated 28% last year. (These are averages certain areas did even better)

27 My Forecast & Predictions Now 1. Real estate will continue to recover and increase in value. 2. Residential real estate will continue to lead the real estate sector in the news. 3. The next wave of massive appreciation rates will be in commercial real estate (Industrial, Retail, and Office) 4. We could be at the previous high values within the next 7 years for residential real estate in many areas, and 7-10 years for commercial. 5. The next cycle top will likely be above previous highs in all real estate, sometime between 2020 and 2030.

28 Factors Driving My Conclusions 1. Real inflation will begin to take place. The Fed printing WILL have it s consequences at some point in time. 2. Low interest rates (relative to historical highs) will continue to dominate for coming years due to the governmental need to roll debt at low rates. 3. The economy will continue to grow (regardless of it s pace) and that will assist real estate values. 4. Leverage will become more and more available over time, and it will not be driven on liar loans as it once was, which will increase the stability of the real estate asset class long term.

29 K-Wave Understanding the cycle is more important than the dates.

30 Monthly Average Sale Price Per Foot in Phoenix (Residential)

31 Monthly Average Sale Price Per Foot in Phoenix (Residential)

32 Who is buying?

33 Who is buying? Institutional investors are big buyers in Residential Homes!...To the tune of BILLION$. Blackstone (Invitation Homes) Starwood (Waypoint Homes) Silverbay (Silverbay Property Corp.) (Ticker: SBY) Colony Capital Regardless of the billions these companies are spending, individual buyers are still the majority of the group.

34 What about foreclosures?

35 What about Las Vegas?

36 What about Las Vegas?

37 What about Las Vegas?

38 What about Las Vegas?

39 What about Las Vegas? New Listings increasing due to equity sales.

40 What about Las Vegas? In January 2012, the median home price in Las Vegas was $118,000. In August 2012, the median home price in Las Vegas was $138,000. In August 2013, the median home price in Las Vegas was $182,000. That is an increase of 55% since January The median home price at the top of the market was $315,000. We are still 42% off of the top of the market in Las Vegas median home prices.

41 A housing shortage?

42 Interest Rates

43 Interest Rates

44 Interest Rates

45 Interest Rates What are interest rates today? Residential 30 yr. fixed: 4.5% Commercial loans (various terms): 5% Compare these rates to historical interest rates. Despite the increase of almost 1.5% in the last 18 months in mortgage rates, this is still a generational opportunity to obtain mortgages at these low rates!

46 Interest Rates Will rates skyrocket? I have an underlying belief that interest rates will remain low, relative to history, for the near-term. The U.S. Treasury needs to roll the long-term U.S. Debt at the best interest rates possible, thus this is a very important reason why the Fed will try to keep interest rates reasonably low.

47 Interest Rates What will higher rates do to the real estate market? 1. It will force people to realize that interest rates won t stay low forever, and get people off the fence to buy. 2. Higher rates will also nudge wages to increase to meet the higher cost of housing i.e. inflation. 3. Higher rates typically means inflation, and in times of inflation, real estate does very well.

48 Interest Rates I strongly urge you to consider: 1. Refinance all U.S. real estate debt at long term fixed rates. 2. Establish and/or increase holdings in U.S. real estate

49 What about commercial real estate? I believe that commercial real estate is the next wave of recovery.

50 What about commercial real estate? Credit tightening and loosening as the market cycles. Tighten the top Loosen the bottom

51 What about commercial real estate? Commercial Asset Classes (in the order that I rate them) Industrial Retail Office Accommodation (hotel) Multi-Family

52 Commercial Real Estate In A Nutshell The better things get for people financially, the more they will spend. The more they spend, the more businesses can sustain. The more businesses that can sustain, the better the occupancy rates. The better the occupancy rates, the higher the rents. The higher the rents, the higher the value. Its that simple. Anyone who tries to make it more complicated than that is just trying to flex ivy league school muscle.

53 Commercial Real Estate - Where is the Big Money? The big money (hedge funds) have been buying residential real estate. However, that market is recovering too quickly for them to continue in that space, so they are quickly moving to commercial real estate. My advice: Start buying it before they do it for you.

54 Is it too late to invest in real estate? I am often asked, Is it too late for me to buy? Is there any meat on the bone left for me? The answer is YES. There is plenty of upside from here in the real estate markets. I expect real estate to do VERY well for the next decade or more.

55 My Recommendations 1. Buy Residential Real Estate For The Long Term. 2. Buy Commercial Real Estate For The Long Term. 3. Lock In Financing For As Long Of A Term As Possible. 4. Buy QUALITY REITS. (Consider SBY beat up recently on a bad article published) 5. Buy Quality, no matter what you buy.

56 Contact me with questions. me:

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