According to the Deseret News,

Utah’s economy is the single strongest state economy in the nation, according to one Utah economist. And the single strongest sector within that economy is construction.
It’s growing so fast that many construction companies say they can’t hire fast enough to staff the jobs they’ve got on the docket. It’s growing so fast that, according to some general contractors, projects are being delayed or redesigned to suit the available labor pool.
It’s growing fast, and though the pace may slow to a trot instead of a frothing gallop, industry watchers say Utah’s construction market will continue to see healthy growth for years, perhaps decades.

Thats good news, if its true. Where there are jobs, there’s a demand for housing and home prices should continue to stay strong. I’ve been investing in Salt Lake City for just over 2 years and so far its been a very good ride.

According to the Central Valley Business Times, California foreclosure sales neared $2 Billion in March.

“Foreclosures sold at auction now account for 15 percent of all home sales in California and continue to rise,” says Sean O’Toole, CEO and founder of Foreclosure Radar. “This isn’t just a story about failing subprime lenders and their customers. At the current pace, foreclosures will be a significant part of the real estate economy. A fact which bears close scrutiny even in areas that are not yet affected.”

Sounds like home prices in California aren’t going to keep on going up forever. Also, check out QuiggleMe.com, an interesting blog about the mortgage industry and all its evils from a seemingly honest (gasp) mortgage broker.

Spent 6 hours this weekend at a self-storage mini-seminar. The speaker, Cory Donaldson was pretty good. He started buying real estate 15 years ago. He bought a duplex, then a four-plex and eventually starting buying small apartment buildings.

From there he 1031’ed into mobile home parks and self-storage facilities. He currently owns 500 mobile park lots and 2500 self storage units.

Seems like self storage units can be better investments than regular real estate like single family homes and apartment buildings.

• There’s hardly no maintenance.
• It easy to get rid of people’s stuff if they don’t pay
• You can remotely run it if you have internet and a phone line
• Boosting the rents can greatly increase the value of the property
• They might actually cashflow!

I had attended a 3 day boot camp before but it seemed a lot more difficult at that time. I guess as I’ve done more and more deals, my confidence to do bigger deals has increased too. Anyway, I’ll be looking at self storage facilities to possibly buy.

I have been looking at apartments but none of the ones I’ve seen are any good. They’re being sold solely on proforma (which is a fancy name for best case scenario that the current owner hasn’t been able to achieve) and are too expensive. I’ve come to the conclusion that people that buy apartment buildings that are over-priced for one reason. Not to make any money, but to be able to use the write offs against their other income.

I think the yen and the Japanese real estate markets are undervalued and I’ve invested a little bit in both. But the strategies I’ve employed (opening an account with an international broker with access to the Tokyo Stock Exchange) might be too much work for many of you.

Wealth Building Lessons has a good post on this topic. Check out the posts on the
1. Carry trade and how to profit from a rising yen and
2. Japanese REITs and the safest investment in town.

Who knew Bank CDs could be so exotic!

In a previous post, I had explained how I research real estate market cycles.

At the time (around september 2005) I was looking for a place to invest the proceeds of my california properties which I thought had peaked. I chose Salt Lake City because it looked primed to start appreciating. I’m terms of appreciation, it was near the bottom of the list of top housing markets.

I just saw the national home-price appreciation numbers for 4th Quarter 2006 issued by NAR(National Association of Realtors) and SLC is now number 2 on the list with 22% appreciation last year!

However, when looking at NARs numbers, don’t take them to be the gospel truth. They may be wrong, or wrongly applied. For example, the average number for Dallas-Fort Worth is -4%. Considering that the population there is probably around 7 million, that seems too big an area to consider ‘average’.

Always try to look at another source to cross-verify the data. DataQuick is a good source, but you typically have to pay for the information. I really like John Burns’s Real Estate Consulting. I consider him a much more relevant source of info than NAR. His Metro Stats page has broken down Dallas and Fort into seperate components (like they deserve to be) and you can see there’s a 25% difference in median home prices between the two. But what I think is really important is the Housing Cycle Barometer Index.

Its a proprietary method of determining where home prices are in the housing cycle. This is where you want to focus your attention. An HCB value of 1 means the property is the cheapest its ever been historically and 10 means its the most expensive. (Not in actual dollars, but in economic terms).

For example, Salt Lake City which is 5.2 (out of 10) is roughly in the middle of its cycle. With people spending 29% of the average income its probably a safe place to invest. However, San Diego which is 7.2 on the HCB scale and where people spend 75% of the average income on housing and saw a decline of 4.5% in the 4th quarter is probably very risky! Am I glad I sold out of San Diego when the going was good!

Remember, always do your own research. And never blindly follow someone else’s advice. You never know if they have a hidden agenda.

If you don’t know anything about research, the first thing to do is read some good investing books.