Archive for the ‘debt’ Category

Interest Rates, Stimulus Dollars and Real Estate Activity

Last week the Federal Open Market Committee (FOMC) held the most anticipated meeting of the year. Investors and economists had high expectations for Bernanke & Co. to launch a new round of quantitative easing.

Under this type of program, the Fed injects more cash into the economy by purchasing bonds in the open market. This in turn pushes interest rates lower and helps to stimulate economic activity.

Thursday, the Fed announced that they would initiate a new program under which they are committed to buy $40 billion worth of mortgage-backed securities (MBS) each month for the foreseeable future. This is in addition to the current program in which the Fed is buying $40 billion worth of Treasury bonds per month.

The Fed also reaffirmed their commitment to keep interest rates essentially at zero – and they are extending the time period for these rates through mid 2015.

Even though traders and economists had positive expectations heading into the meeting, the magnitude of the additional stimulus caught investors by surprise. Stocks rallied sharply after the announcement – reflecting expectations that the broad economy should respond positively to the additional liquidity and low interest rates.

How Does the Fed’s Plan Affect Real Estate?

There are two key ways that the Fed’s new round of quantitative easing will affect the real estate market.

First, the commitment to keep interest rates at historical lows through 2015 dramatically increases the risk of inflation. We have already seen the US dollar trade lower (leading up to the Fed’s announcement, and falling even more after the news release).

As the value of the US dollar declines, the purchasing power of dollar-denominated savings and investments will drop. Many economists refer to this as a “hidden tax” on savers because a fixed amount of dollars can no longer purchase the same amount of goods & services.

The way to guard against this erosion of value is to invest in non-dollar denominated assets – typically tangible assets such as precious metals or real estate. The great thing about an investment in real estate is that you can actually enjoy your investment while it appreciates in value.

If you would like to know more about opportunities to protect the purchasing power of your savings by investing in real estate, we should definitely have a conversation. There are a number of different options including purchasing vacation property, rental property, or investing in one of Ashford Capital’s residential development projects.

This is a great time to be protecting your hard-earned dollars and I would be happy to help you evaluate which options work best for your particular situation.

The second result of the Fed’s recent decision will be an increase in real estate activity. You see, with the Fed buying mortgage-backed securities, rates will continue to be very low – making it easier for individuals to purchase new or existing homes.

A couple of weeks ago, we talked about “residential mobility,” or the ability for homeowners to now sell their homes in order to upgrade to a new home or pursue new job opportunities.

As real estate transactions continue to increase, that mobility will become even better and there is simply no reason a current homeowner should be stuck in a home that he or she doesn’t want to be in.

Whether your home value is above or below your current mortgage balance, my team can help you explore options for selling or leasing your current residence, and we can also help you locate and purchase a new home that better meets your needs.

Let’s set up a time to get together and discuss how your real estate decisions can position you to take advantage of today’s economic environment. Don’t let inflation or a bearish perception of the housing market hold you back from capitalizing on today’s opportunities!

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners, Ashford Advisors

678-231-4579
[email protected]

Atlanta Journal Constitution Post – 9/10/2012: Companies go Home Shopping around Metro Area By: Christopher Quinn

Atlanta Journal Constitution Post – 9/10/2012:
Companies go Home Shopping around Metro Area
By: Christopher Quinn

Metro Atlanta’s depressed home prices are drawing the interest of a new type of buyer – companies that buy houses in volume.

Such companies have snapped up foreclosures and short sales in the last few months from Gwinnett to Clayton counties, as well homes listed conventionally by realtors. And they say they plan to spend hundreds of millions on homes in the next two years.

Most are renting the homes – sometimes to the former owners. Others are buying and waiting for prices to increase before re-selling the houses.

It’s a new twist on house-flipping, which usually involves a single entrepreneur. The company purchases have helped push up metro Atlanta’s battered home prices, sopped up foreclosures that depress prices and sales, and created jobs at companies that buy, renovate, maintain and manage the houses.

The downsides are an uptick in prices and competition for home buyers, along with concern that large-scale absentee owners will not take good care of homes.

“Some are acquiring houses from foreclosure and leaving them vacant for a purely speculative investment,” said John O’Callahan, the president of Atlanta Neighborhood Development Partnership.

The nonprofit organization works in community stabilization and helps people of low to moderate income buy homes.

“It’s not a smart business model and is horrible for the community,” O’Callahan said.

But he praised companies like Sylvan Road and Waypoint Homes, which are buying metro Atlanta properties with plans to improve them and move families in as renters.

Sylvan Road, headquartered here, plans to buy $300 million of houses here in the next two years. That will bring an industrial scale to the $3 trillion single-family U.S. home rental business, about 80 percent of which has been owned by small local investors.

America is moving toward a “rentership society,” said Sylvan Road co-founder Oliver Chang, and single family homes represent “one of the most compelling investment opportunities across all asset classes.”

“We want to put $1 billion to work buying and renovating homes across the country,” said Chang, a former head of Morgan Stanley’s U.S. housing strategy.

Chang said Sylvan Road specializes in foreclosures and it spends an average of $40,000 per house in repairs and improvements.
Waypoint Homes, of California, has an Atlanta office and similar strategy. Its managers plan to buy $1 billion worth of U.S. homes for long-term rental.

“We will buy 12 homes [in metro Atlanta] this month and and 17 next month and will continue to ramp up…We hope to get to a place where we are buying 100 a month,” company director Doug Brien said.

Other investor-buyers active in metro Atlanta include Landsmith-Precise of California and Michigan, which wants to buy $20 million worth of houses; Atlanta-based Ashford Capital Partners with another $20 million in planned purchases and California’s Colony Capital, which wants to buy more than $1 billion in homes nationally. Colony had 10 workers among the 80 or so people bidding for foreclosures last Tuesday on Gwinnett County’s courthouse steps.

Investors backing the companies range from hedge funds to real estate investment trusts and wealthy individuals.

The competition is helping boost prices, which have been rebounding with a more stable market since late winter. The average foreclosure sale price in metro Atlanta rose between January and June by more than 9 percent from a median of $91,657 to $100,220, according to real-estate and data firm RealtyTrac.

The median sale price for all homes in the region was $145,000 in August, up more than 16 percent from $124,500 in August 2011, according to Coldwell Banker Residential Brokerage.

Local observers say most homes bought by investors cost less than $200,000.

The effect of investors stepping in the last few months has been noticed by shoppers and real-estate agents, who have seen prices rise with interest from multiple bidders.

Verna Jones of Atlanta has been trying to buy a house since January without luck.

“I have been looking and been bidding. For example, I found house last month. I bid and it went into multiple offers,” Jones said. She lost the bid, not the first time that happened.

“It’s just more competition for the homeowner,” she said.

For homeowners looking to sell, however, the companies broaden the market.

Home ownership levels, which peaked over 69 percent in 2004, have dropped to about 64 percent. That would put an estimated 3 million former owners in the rental market.

Also, about 5.5 million owners are 90 days or more delinquent on mortgages or in foreclosure, according to Keefe, Bruyette & Woods, the international financial services company. If just half of those lose a home, it would put millions more in the rental market.

In metro Atlanta, 6,426 foreclosure notices were mailed out in August alone, according to Kennesaw real-estate services firm Equity Depot.

Providing rental homes is a necessity in this environment when so many have lost homes to foreclosure, Brien of Waypoint Homes said.

“Investors have to come in and buy homes and provide homes for people who are locked out of ownership,” he said. “They have families, kids, pets. Moving into an apartment is not an option for them.”

http://www.ajc.com/news/business/companies-go-home-shopping-around-metro-area/nR6yF/

How Long Will the Housing Recovery Last?

With the Labor Day holiday now in the rear view mirror, it’s time to hang up the beach towels, put the kids in school, and get back to business.

If you’ve been paying attention to the economic trends this summer, you already know that the environment has been improving. Consumer confidence is growing, the latest round of retail sales showed acceleration, and the stock market is within striking distance of 52 week highs.

On the housing front, the bullish trend is picking up momentum. Home prices climbed throughout the summer as inventory levels of homes for sale have finally dropped to reasonable levels.

With home prices improving, we’re starting to see more commentary on the real estate industry. The big question right now is how long prices will continue to rise, and whether the strength will continue to support both the affluent side of the market as well as the lower end of the price spectrum.

One thing to consider when analyzing this recovery, is the magnitude of the previous drop in housing prices. We’re exiting a period where prices have dropped far from their peak values, and have been under pressure for a period of not months, but years.

So when we experience a few months of improvement, it’s natural for homeowners and investors to be skeptical of the advance. But the reality is, that we can expect the recovery to last much longer (with significant price advances still to come), before coming anywhere close to reaching an “extended” or “over-valued” environment.

This brings up two very important discussions:

Investment Opportunities

I recently had a prospective investor ask me if he thought it was too late to get involved in the real estate market.

After seeing home prices advance in the Atlanta area, he was worried that he may have missed the boat. He was frustrated, thinking that he had been waiting for the market to bottom for years, only to miss his opportunity by a few months.

My advice to him was to look at the recent advances within the context of the last 10 years of price action. The rebound from the last few months is material enough to signal that the advance is legitimate, but not anywhere close to putting the market into overbought or extended-valuation territory.

We have some exciting investment opportunities that we are currently tracking in our investment arm (Ashford Capital Partners). If you are interested in putting some of your investment capital to work in the vibrant Atlanta real estate market, give me a call and I can show you some of the tremendous deals that we are currently working on.

Homeowner Mobility

The second issue carries a much more personal note…

I know of a number of families in my neighborhood who have been waiting for the market to pick up so that they can make a housing transition.

There are several people who are looking to upgrade to a larger house, a few empty nest parents who now have too much space, and a number of families that have job opportunities in other parts of the country that require a move.

Given the improving state of the real estate market, these families now have the ability to pursue opportunities that simply weren’t available to them a year ago. Houses are being put on the market – and actually SOLD in a reasonable period of time. I can’t tell you how refreshing this is for families who have been patiently waiting for the opportunity to make an important transition.

If your family fits into this category, and you would like to explore the possibility of selling your house, buying a new home, or even renting out your property to generate income, we should have a conversation.
I would be happy to sit down with you at your home – or we could grab a cup of coffee at Starbucks – and discuss your situation. I think you’ll be impressed with the options available to you, along with the quality of service that we offer through our retail division – Ashford Advisors.

I hope you and your family had a wonderful Labor Day weekend, and I look forward to speaking with you in the next few weeks.

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners, Ashford Advisors
678-231-4579
[email protected]

Ashford is Expanding!!

Introducing Ashford Advisory Services

Investors and Colleagues,

Today, I am excited to tell you about a new suite of services we are offering at Ashford Capital Partners!

As the overall real estate market heats up, our existing real estate investment programs are performing very well. We’re seeing demand from builders, home prices stabilizing, and new construction projects rolling out.

While our existing investment programs are still great opportunities for a certain class of investors, I’ve been talking with a number of clients who want a more personal approach to real estate investing.

You spoke, and we listened…

A number of you are already taking the bull by the horns and pursuing your OWN real estate investment opportunities. Based on dozens of conversations, I’ve realized that the Ashford community has exposure to a very wide (and deep) assortment of real estate investments.

The range of involvement spans from commercial to residential… from raw land to complete structures (and every level of development in between)… from investors scouting out properties for purchase, to existing owners looking for buyers.

Considering the rebound that we are seeing in the Atlanta real estate market, you don’t need to have a master’s degree in real estate to participate. Many investors simply need a small amount of advice, an introduction, or an answer to a technical question, in order to generate their own positive investment returns.

And that is the inspiration behind the new suite of advisory services that we are rolling out. Our goal is to help investors take advantage of the rebounding real estate market – in whatever capacity they are comfortable with – offering our expertise to ensure the highest probability of success.

A Few Featured Services…

Over the next few weeks, I’ll be sending you more detail on some of the premier services that we are offering under our advisory arm. But today, I want to outline a few of the important areas we can now cover…

• Property Evaluation – If you’re in the market to purchase a property (or group of properties), our evaluation will cover the area demographics, cash-flow and ROI considerations, zoning issues and more…

• 1031 Exchange Transactions – Real estate investors can take profits in one property, while rolling the proceeds into a new investment – without paying taxes on the gains! We can help you structure a 1031 exchange to meet regulatory requirements – and walk you through the process step by step…

• Rental Property Management – Have a rental property (or several)? Our new advisory arm can help you locate and evaluate potential renters, manage the property (including maintenance, collection, and other ancillary tasks) – allowing you to enjoy the profits with less of a time and energy investment…

• Residential or Commercial Sales – We can list your property, seek out qualified buyers, assist in setting up the details of the transaction, and effectively manage the entire process for you.

All of our services are offered on an A la carte basis, allowing you to pick and chose which services you really need. And many times, the cost of the advisory services can be rolled into a particular transaction (such as the purchase or sale price of a property) – resulting in no “out-of-pocket” expense for our customers.

Ashford Capital Advisory Services are equally applicable to both individual AND professional investors. We are able to work with registered investment advisers, broker / dealers, and individual investors to meet the needs of the end client.

Do you have a real estate question – or an issue we can help you with? I’d love to arrange a meeting to discuss your real estate investment questions, and determine how we can help. Please give me a call this week so we can set up a time to meet.

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners

678-231-4579
[email protected]

Seeing Renewed Interest From Builders

Spring is always an interesting time for the real estate market. As families approach the end of the school year, they are more interested in pursuing career opportunities or upgrading into a better home. Spring is also a much easier time of year for homebuilders to break ground on new developments.

After several years of muted action, 2012 is shaping up to be a banner year for real estate developers. The broad economy has been slowly improving, the overhead supply of housing (and raw land) has declined to more reasonable levels, and the best communities with strong job growth are experiencing strong demand for residential land.

The activity is particularly strong in the metro Atlanta area as builders begin to layout out their plans for this year. Over the past two weeks, our phones have been ringing off the hook with a large number of brokers and builders coming out of the woodwork.

The brokers are typically working for small developers who are interested in securing parcels for their spring building projects, and the larger builders are contacting us directly to lay the groundwork for purchase discussions.

Based on my conversations with these representatives, it is clear that the builders’ acquisition departments have told the buyers to put it into HIGH gear. After surviving through years of stale demand, these companies have to take advantage of the new dynamic. If they don’t have houses to sell to consumers this year, they bear the risk of missing out on a tremendous rebound.

Negotiating From a Position of Strength

I have to tell you that I’m thoroughly enjoying the bidding process we are entering right now. Ashford Capital – along with our investment partners – hold a number of tremendous parcels of land that are very attractive to these builders.

Not only are our developments in areas that represent high demand for housing, but most of our properties already have significant infrastructure investments in place. Ashford Capital didn’t have to pay to put the roads, sewer, electricity and zoning in place. For the most part, these services were taken care of well before we bought the properties.

Instead, we were able to take advantage of a once-in-a-lifetime opportunity to pick up these lots from banks and the FDIC at literally pennies on the dollar.

Now, as builders come to us with interest in the properties, we can negotiate a price that represents a significant profit to our investors, while still offering a compelling value to the builders.

It has always been my belief that both sides of any business transaction should walk away from the table feeling like they got a good deal out of the situation. Considering the low purchase prices on our properties, we can offer the builder a very reasonable price – which allows these properties to move quickly (ahead of other properties we are competing with).

Of course, we will always sell these properties at prices that give our investors the best possible return on their capital – in the most expedient manner possible. I’m looking forward to seeing how these negotiations progress over the next few weeks and months.

New Value For Your 2012 Investment Plan

If you’re interested in learning how Ashford Capital generates returns for investors, I would welcome the chance to meet with you.

Our investment options are typically structured with the investor receiving a preferred rate of return along with a profit sharing agreement once a property is sold.

This approach allows investors to generate a healthy return, while incentivizing us to market and distribute each property to a developer or builder as quickly and profitably as possible.

We are able to set up investments for IRAs, retirement programs, as well as traditional investment accounts, and I am able to partner with investment advisors and brokers so that your real estate investment complements your existing arrangement with more traditional investment programs.

Please give me a call at your convenience. I’m looking forward to discussing your financial future and determining how we can partner with you to grow your investment wealth.

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners
678-231-4579
[email protected]

What The Bank Rebound Means For Ashford Investors

We’ve seen some interesting economic dynamics in play so far this year. Despite the big picture risks that are in play on a global basis, the level of investor confidence is actually picking up.

Case in point: The financial sector… This is an industry that has been plagued by risk over the last decade. Banks and insurance companies were hit hard with the credit / mortgage crisis beginning in 2007 and they still haven’t fully recovered.

But to add insult to injury, the sovereign debt crisis in Europe has created new risks to the equation. Even though the crisis may seem far removed from the US, our local banks still have a significant amount of exposure because of architecture of the global financial system.

Early this year, there have been a number of negative headlines that made it clear that a solution in Europe is still a long way off. But the interesting thing is that the financial stocks didn’t respond negatively. In fact, banks and insurance companies have been trading higher and it appears that sentiment is shifting to a more positive perspective for the group.

Financials Are Closely Tied to Real Estate

The welfare of our largest US banks is more closely tied to real estate than you might think. Both large money center banks as well as regional banks in our area are struggling with real estate assets that they have foreclosed on, and capital ratios that are below “safe” levels.

Whenever financial institutions see their assets drop and their liabilities increase, they must make changes to their capital structure. This usually means selling assets to reduce risk – and in this case the assets that they are trying to sell include a significant amount of real estate.

With major banks liquidating real estate as “motivated sellers,” it has been challenging (at best) for property values to increase. But now that sentiment is improving for banks, there are other options for these companies to improve their financial situation.

Rising stock prices can have a direct impact on the capital structure of these companies. Banks can actually curtail their property liquidation programs and instead sell new stock to shareholders. This allows the bank to wait for property values to increase – and results in better value for their existing shareholders.

The Trickle Down “Local” Effect

Looking at this dynamic from a local Atlanta perspective, I see the improvement in the financial sector as both a positive and a negative for us.

On the negative side, it looks like we’re entering a period where banks have more leverage at the negotiating table. If my contacts from Wells Fargo, Regions Financial, SunTrust Banks – and other financial institutions – don’t have their risk manager breathing down their neck, they may hold out on deals and demand a higher price for any new purchases.

Since we’re committed to only buying top-tier properties at a significant discount, our number of purchases may slow significantly. This means less opportunity for investors that wait for a few months before pulling the trigger.

On the positive side, if banks quit selling properties at a discount, it will give prices plenty of room to run – and likely be very beneficial for our existing investments.

Builders are beginning to break ground on new properties, gearing up for the spring selling season. There are only a limited number of attractive home sites in the Atlanta area for them to develop. Many of these sites are owned by our investors and will command a premium price as builders MUST get structures in place right away.

So far, 2012 is shaping up to be a tremendous period for real estate investments, with the risk of “missing a big move” motivating property buyers.

Time is Running Short

Looking at our own inventory of properties, Ashford Capital has just a few slots left in our existing real estate projects. These are land tracts that we have purchased and are actively marketing to local builders. Once investors claim the remaining slots for these properties (which have been purchased at a tremendous discount), the next set of opportunities will likely be at much higher prices.

I would love to take a few minutes to show you the investment programs that are still available and help you generate returns as the market turns higher. Please give me a call today so someone else doesn’t claim your spot. You don’t want to risk missing out on these tremendous opportunities.

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners

678-231-4579
[email protected]

Happy New Year from Ashford Capital

Investors and Colleagues,

It’s time to turn the page on the calendar and step into a brand new year. Each year at this time, I like to take a few moments to reflect on our business over the past year – to take stock of the current situation – and to set goals for the coming year.

On a day-by-day basis, we are constantly busy managing our portfolio of properties, negotiating with the banks and FDIC for new purchases, and communicating with builders and developers. It’s a busy job, which is why it is so important to step back and take a look at the big picture from time to time.

2011 In Review

The past year was a tremendous period for us on the acquisition side of our business. For the majority of the year, financial institutions and the FDIC were motivated sellers with balance sheets full of distressed assets and an acute need for capital.

In this type of environment, buyers with capital are at a huge advantage. Our team put together three major acquisitions – buying residential developments for literally pennies on the dollar.

Each of these transactions gave us ownership of a block of residential lots with infrastructure (roads, utilities, zoning) already in place – making these prime lots for builders to purchase in the near future.

Drawing on our expertise in the Atlanta area, we passed up a number of opportunities that were in areas less likely to experience economic growth, and focused exclusively on metro-Atlanta communities that will be high-demand areas. This is the advantage of working exclusively in Atlanta, giving us unsurpassed expertise in this specific market.

While the majority of our acquisitions in 2011 are already committed to existing Ashford investors, there are still a limited number of slots available. New investors can purchase a direct interest in a specific development – giving them a chance to profit when we sell these developments to builders in the near future.

Speaking of the future – let’s take a look at how 2012 is shaping up…

Looking Ahead to Opportunities in 2012

This coming year we are looking at an exceptional environment on both the acquisition as well as the distribution side of the business. Financial institutions are still facing challenges in terms of their capital structure.

New regulations and pending economic risks make it necessary for banks to raise “tier 1” capital – meaning cash and US treasuries. The only way many regional as well as national lenders can meet these requirements will be to liquidate their real estate holdings. Remember, they hold many residential developments after foreclosing on bad loans.

Our team is currently negotiating with these institutions to secure the best possible pricing for our investors. We’re also in the early stages of research on some other properties that are just now coming to market.

On the distribution side, the picture is even better! New data shows that builders are benefitting from a rebound in the housing market – and with spring approaching, they need to have inventory to sell to new home buyers.

For the month of November, new home sales were 7.3% higher than the previous month – hitting the highest level in 19 months!
You’ll remember from my last letter that the number of new permits issued is also rising. This indicates that the environment should continue to improve as new homes are built and builders see their inventory moving.

Bottom line: We’re past the point of seeing a few individual data points that show “potential” improvement. The data is confirming a truly positive trend in the housing market – which means our current investments should perform very well in 2012!

Setting Financial Goals

The New Year offers a great time to take inventory of the professional side of our business, but our most important focus at Ashford Capital is much more personal. Our ambitions always revolve around YOU, our investors who trust us to provide strong returns with their capital.

As we enter 2012, I want to ask you to take a moment to look carefully at your own investment plan. Are you excited about your opportunities in the coming year? Do you have confidence that you will meet your short-term AND long-term financial goals? Are your assets working as hard for you as they should be?

If you’re unsure about how competitive your rates of return are – or if you are looking for diversification and strong returns in the coming year, I would love to have a chat with you. You worked hard to build your investment account, and now your money should be working just as hard for you. Whether your funds are in a retirement account or a traditional investment account, Ashford Capital can help you protect and grow your wealth.

Wishing you a happy New Year,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners

Sharp Rise In November Housing Starts

Investors and Colleagues,

Things are looking up for the residential real estate market!

This week, the National Association of Homebuilders announced that housing starts jumped 9.3% in November. This is the best reading in over 18 months – and a solid piece of evidence that the entire industry is in a bullish transition.

For the month of November, the annual rate of housing starts hit 685,000 – well above the levels that economists were forecasting. In the stock market, shares of homebuilders like Pulte Homes, Toll Brothers, and Lennar Corp are in a solid bullish trend. Shares of Home Depot and Lowes are also moving sharply higher as demand for their building products increase.

I don’t talk about financial markets too much because I believe your best investment opportunity is in the “real” thing – actual real estate parcels that are tangible and hold true value. But today, I want to talk about how the improving market environment for home builders affects our investments here at Ashford Capital…

Access To Capital Is Everything!

If you’ve followed our investment process for any length of time, you know that we buy distressed land from the banks and the FDIC for pennies on the dollar. In most cases, these land parcels are already developed – with roads, utilities, and zoning already complete. Our ultimate goal is to sell these parcels to a developer who will then build individual homes to be sold to residents.

One of the biggest problems with the financial crisis of the last 3 years is that companies lost access to capital. This crimped growth, caused companies to cut salaries, and basically snowballed into a historic recession.

But with the most recent economic data pointing to an improvement in the housing market, financing is becoming available to homebuilders. As stock prices for Lennar, Pulte and Toll Brothers rise, these developers have more options.

Company executives can now issue new stock at a premium price, and use the capital they raise to buy more land and build more houses. Existing investors like this approach because it improves the growth rate of the entire company. Prospective investors are willing to participate in a stock offering because they have already seen the economic and stock price improvement.

Another option for these developers is to raise debt capital. With the companies clearly showing strength, they can now issue bonds with interest rates that are attractive to investors (remember, investors are used to getting next to nothing in terms of interest) – and also conducive to growth.

And what are these homebuilders going to do with this new capital? They’re going to buy the properties that WE initially took from the banks at fire-sale prices! This is where our foresight and our disciplined buying approach really pay off!

Needless to say, I’m excited about the coming year and you should be too. 2011 has been an incredible year for us as we locked in some tremendous properties. 2012 is looking like a great year for selling some of these properties and realizing gains as values increase.

The best part is that we still have a few slots available for a couple of our best developments. Whether you’re already involved with one or more of our deals – or this is a new investment concept for you – we can still help you invest in properties that have been purchased from distressed banks or the FDIC, and are being actively marketed to homebuilders in the Atlanta area.

With many of your stock investments posting losses for this year, why not sell and realize your loss for tax purposes, and put some of your capital into an Ashford Capital project?

Wishing You a Happy Holiday…

This is the time of year when we count our blessings and cherish time with family and friends. I hope you’re able to take some time away from the busyness of this season and enjoy some peaceful time with the ones you love.

It’s also a great time of year to remember those who are less fortunate than us. Hopefully you and your family are able to find opportunities to offer a helping hand, a kind word, or a special gift to someone in need. We truly do have so much to be thankful for.

Happy holidays from all of us at Ashford Capital!

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners
678-231-4579
[email protected]

Shifting Dynamics for Residential Real Estate

Investors and Colleagues,

There’s a major transition underway for residential real estate in the US. For a number of years, inflated home prices have distorted the equilibrium between owning a house, signing a long-term lease.

Since the “American Dream” has been largely built on home ownership, purchase demand for homes jacked up prices to unsustainable levels, while rental rates were low due to depressed demand. But according to a recent study, the price points have reversed to a point where it is much more economical to buy than rent. From the Wall Street Journal:

“Home prices and mortgage rates have fallen so far that the monthly cost of owning a home is more affordable than at any point in the past 15 years and is less expensive than renting in a growing number of cities.”

If you think about it for a minute, this is the way the equilibrium actually should work. When you lease a car, you pay more per month because you are paying a premium for the flexibility of a short-term commitment. The same should be true when you rent a house. Renting keeps you from making a long-term commitment to a particular area – and for that flexibility, you pay a premium price.

Looking at the picture from the perspective of a home buyer, it also makes sense. If you’re going to buy a property to live in for 20 or 30 years, you should expect to get a “discount” for committing to that home for a long period.

And of course if you buy a home for the purpose of renting it out and collecting monthly income, the dynamics have to make sense. You need to expect to collect more in monthly rent, than your interest, taxes, and maintenance expenses.

Now that these price dynamics are back to a “fair” place of equilibrium, the entire market is affected.

Price Affects Supply and Demand

In most economic textbooks, we are taught to look at “price” as a function of supply and demand. The statement that we all remember from these classes is “All things being equal…”

But in the real world, supply and demand don’t operate in a vacuum. Consumers change habits based on price points, along with assumptions of value and long-term expectations. In the case of the residential real estate market, price often affects supply and demand (instead of the other way around)

Today, as individuals make decisions about where they want to live, they have a number of options to consider. They can rent space in a multi-family community (apartments or townhomes), they can rent space in a single family dwelling (there are plenty of distressed as well as premium homes for rent in the Atlanta market) – or they can take advantage of low mortgage rates and attractive pricing to purchase a new or used home.

Since the monthly cost of buying is now lower than renting, we’re expecting to see demand pick up in 2012 – leading to increased activity in the Atlanta housing market. This will result in two important dynamics:

• The “shadow inventory” of homes that banks and the FDIC are holding for sale will be absorbed by the market, resulting in a more stable real estate environment.

• Builders with low inventories of finished new homes will need to acquire land to keep up with the rising demand for new homes.

Seizing The Trend

We’ve all heard the phrase “make hay while the sun shines…” In business as well as when investing, it’s important to capitalize on opportunities when they are available. This requires both the ability to recognize an attractive opportunity, as well as the willingness to execute on the idea.

At Ashford Capital, we have worked hard to identify the most opportunistic properties in the Atlanta market. These are the developments that builders will be first to purchase – so that they can meet rising demand for new homes.

In terms of execution, we have stepped up to the plate and purchased these properties at an incredible discount. Our investors have made a similar decision by identifying our investment programs as an attractive way to benefit from the real estate opportunities in Atlanta – and they have executed by placing capital in our investment programs.

Is your investment program following a similar path? Are you recognizing the opportunities available to you – and executing by making your capital work for you?

If so, then I would love to chat with you about how Ashford Capital can offer strong absolute returns as well as diversification for a traditional investment program. If not, then what better place to start than with an investment company that has identified high-return situations and allows you to come alongside and share in the profits?

I would love to have a call with you and give you more information on our investment opportunities. Would you call me this week so we can set some goals for your investments in the coming year?

Wishing you every success,

Matt

Happy Thanksgiving From Ashford Capital

I trust you had a healthy and pleasant Thanksgiving, spending quality time with friends and family. During challenging and uncertain economic periods, it is important to remember that we ALL have reasons to be thankful, and to value the quality time with those who know and love us best…

In addition to the many personal reasons I have to be thankful, I’m also excited to be in a business that offers my investors some of the best investment opportunities available in today’s market. This year, we have been working very hard to identify and purchase some of the most attractive properties in the Atlanta market – and we have been able to negotiate tremendous purchase price discounts.

This week, a new real estate report came out, identifying some of the most attractive markets available for investors… I’ll bet you can guess which city hit the top tier in terms of sales activity…

Atlanta Leads the Competition

The October existing home sales report was encouraging no matter what city you invest in… (ok, New York and Washington DC were slightly lower, but all other major cities reported gains). For the month, total existing home sales were up 1.4% from September’s reading – and 13.5% above the October reading from 2010. No matter how you slice it, home sales are picking up which is great for our business.

But as I’ve mentioned quite a few times, real estate is a “location” game – and national trends aren’t nearly as important as what is happening in our own back yard. Well, you’ll be happy to know that Atlanta is “on the map” when it comes to a robust recovery in housing.

According to the National Association of Realtors, Atlanta placed second among the top-tier metro regions with an increase in sales of 33.4%. To give you some perspective, the only city that beat Atlanta was the Miami / Ft. Lauderdale region which saw sales pick up by 33.6% – not a meaningful difference.

It’s hard to overstate just how important this reading is. As sales levels pick up, the level of “inventory” – homes for sale or ready to be put on the market – declines. Basic economic theory tells us that when supply levels decline and demand picks up, price levels naturally rise. This means that the properties currently held by Ashford Capital are increasing in value, leading to positive returns for our investors.

Fewer Distressed Homes in Play

One of the key components to consider when looking at home sales figures is the number of “distressed” sales versus more traditional transactions. “Distressed” transactions are divided into two categories: foreclosures, and short-sales…

For the month of October, distressed sales made up 28% of the total – down from 30% in September. It’s interesting to see that although the total number of sales was higher, the quality of transactions were actually higher (a smaller percentage of foreclosures and short sales).

The decline in distressed transactions points to two important concepts. First, we’re seeing banks and the FDIC slowly working through their inventory of foreclosed homes – and the number of homeowners “stuck” in short sale situations is reaching an inflection point.

Second, on the demand side, investors are looking for higher-quality houses. There is less demand for the perceived “beat up” houses that usually fit into the distressed category, and more demand for high-end housing that is more in line with the new home business that we cater to.

The bottom line is that this report was an important indicator of strength in the housing market, and more specifically for our local Atlanta region.

Let’s Have A Post-Thanksgiving Lunch

I know that this soon after Thanksgiving, the last thing you may want to think about is eating… But I’d still like to chat with you about our real estate opportunities.

Maybe this week – after the in-laws leave town and the schedule gets back to normal – we could arrange a time to meet. I’d love to grab lunch with you, or even just a cup of coffee, and discuss how Ashford Capital can help you meet your investment goals.

There is tremendous opportunity in our market right now, and we’ve worked hard to be in a place to take advantage of these trends. I look forward to our conversation.

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners

678-231-4579
[email protected]

Google+