Ongoing lessons learned from the search for the perfect investment ...

We?re growing but slowly. Corporate earnings are not strong. There are great growth stories out there. Just a little harder to find them.

More thoughts on commercial (i.e. office building) real estate investing. Last Friday I laid out some things I learned. Click here. I asked some of my better real estate mavens for their comments. The best:

I think what you are describing is basically the concept that if you pay too much for the bricks at the outset, you are eventually doomed.? Having bank covenants that put the loan in default because of a low appraisal, or reduced cash flow means that the borrower did a bank loan origination which is generally a recourse or partial recourse loan, it is generally 5 years or less and usually bears very low interest rate.

These loans are generally dumb as any sane borrower would not risk equity (especially investor equity) with loan covenant clauses that allow for the call of the loan if appraisal is low or cash flow declines.? This is sabotage from the start so you should just not invest in anything like that again.

Some of what you wrote is not actually correct in my view. I think values of core stabilized real estate in downtown major markets, are not worth half, but actually are back to mid 2000 levels or exceeding them.

The market is bifurcated.? We?re just not seeing the demand for suburban office or for office in tertiary markets where institutional capital can?t park their safe money.? You are definitely correct about real estate that was bought at peak levels in mid 2000s that has debt coming due and requires an equity infusion to refinance.

It is a challenge to get same proceeds unless cash flow is up since lenders are more conservative today.

With that said, debt is widely available and active, just at lower leverage levels.

Finally, there are many banks that think they are just as good as the operator in filling buildings. There is one bank in Portland that recently foreclosed its borrower out, and with 60% vacancy has decided to spend a fortune renovating the buildings and hired a team to help them lease it up etc.

I have seen other lenders doing this too, even conduit servicers are foreclosing and operating because they squeeze out more fees! Lenders are not afraid to operate property and then sell, even though, you are correct, that they are not qualified to become operators.

I?m still investing in real estate syndications, but very cautiously. Promised (and actual) returns are lower. Leverage is down, i.e. you can borrow less from banks. Syndicators are far more conservative. Popular investments are: residential apartments/developments and commercial properties with a modicum of ?hair,? i.e. some vacancies and some need to be creative with fix-ups, free rent and negotiating on the rent going forward. Medical is booming, but pricey to outfit.

VectorVest thinks Facebook is worth $9.67. Or was on August 16. I?d like to short it. But there are an awful lot of people who want their ?investment? in Facebook to succeed. They want to believe.

My tea leaves tell me Romney will win. Ever since that miserable debate, the volume of pro-Romney, anti-Obama press has exploded. Sample:

This video is pretty devastating also. Click here.

Dumb. Dumb. And dumber. Here am I sitting 20 minutes on the phone with Verizon Tech Support. All three lights on this thing are flashing red. You can?t see them n this picture.

After 20 minutes, they tell me to reboot. Take the battery out. I?ve done that several times. No change. They tell me to take the SIM card out. I do. Bingo, it works. I couldn?t think of that myself? Idiot.

Favorite recent New Yorker cartoons.

Harry Newton, who?s actually having some success unsubscribing from garbage email lists that somehow I got onto.

The better jobs numbers are accurate. But? they?re buoyed by two happenings: Job seekers are taking more part-time work. Fewer people are looking for work because of the population?s aging. But? you shouldn?t pay much attention to one month?s numbers. They?re not real numbers. They?re based on statistical surveys. For more click here. Please don?t believe the conspiracy theories. Jack Welch is senile, or crazy, or both.

My friend wrote a book called Not Working.

He spent months traveling the country interviewing hundreds of people who had lost their jobs. While many were still suffering, he was impressed with the number of people who had ?reinvented? themselves.

?If you can?t be kind, at least have the decency to be vague.? - Jerry Seinfeld

Source: http://www.technologyinvestor.com/?p=15174