Archive for the ‘Networth’ Category

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]

The Consumer Confidence “Trickle Down” Effect

Investors and Colleagues,

Last week we received another strong piece of evidence that the economic rebound is continuing. What’s that? You missed it? Well, I can hardly blame you considering the small amount of attention it received in the financial press…

While the entire world obsesses about the European debt situation – and speculates on how it will affect markets from Wall Street to Shanghai, many investors are missing opportunities because they are so worried about the well-publicized risks.

We will get to Europe in a minute, but first let’s talk about consumer confidence. Last week the consumer confidence index came in at 64.2. The actual number doesn’t really tell us much about the consumer unless you put it into context. The number came in well above the 60.9 reading from September, and was the highest recording in the last 5 months.

So what does this mean for us at Ashford Capital? Like most businesses, our level of success rests primarily on the long-term resiliency of the US consumer. Since the US consumer accounts for roughly 70% of our economy, purchase decisions are what truly drives our economic recovery.

This is an important time of year for consumer confidence. Many retail businesses make the majority of their profit in the fourth quarter of every year. The holiday season is when we truly get to see whether consumers are feeling confident enough to spend money – and how that spending will ultimately work its way through the system.

The early indications are in – and it looks like the holiday spending will come in well above previous expectations. Companies often make hiring decisions based on these confidence reports – and more hiring means stronger economic activity across the board.

Lower interest rates are making it easier for consumers to consider purchasing a house, and as I mentioned to you in my last letter, homebuilders are reporting increasing demand for new houses and inventory is moving.

Strong demand for residential housing is great news for current Ashford Capital investors. I’m excited about the activity that I’m seeing and our attractive properties are becoming more valuable as the environment improves.

So What’s All The Fuss About Europe?

While the environment here at home is showing strong evidence of a recovery, most investors are still extremely concerned about the events in Europe. You might think that I’m about to say that the events in Europe don’t really affect our business in Atlanta – but that’s actually not true…

In an increasingly global economy, uncertainty on the other side of the Atlantic can actually have an effect on our business in Metro Atlanta. But my perspective is a bit different than the reporters on Fox News or CNBC. Instead of immediately wondering what will happen when “the world comes to an end,” let’s connect the dots from Europe to Atlanta.

First of all, the major issue is whether countries like Greece, Italy or even France will eventually default on their debt. If they are unable to repay their obligations, who takes the loss?

The majority of this debt is held by European banks – although US banks have some exposure as well. So if Greece or Italy ends up in default, the major European banks are going to be in a world of hurt. Farther down the line, however, the US banks are in trouble too. That’s because there are plenty of credit lines and derivative agreements between US and European banks.

If US banks end up taking on losses because of a European default, does that affect our business? You Bet! Remember, the majority of our properties have been bought either from US banks that were selling distressed properties at an incredible discount – or from the FDIC after the banks have been declared insolvent.

If US banks take a hit from Europe, the natural reaction will be for them to raise cash from their distressed assets. This means selling MORE properties to us because we are some of the only buyers out there willing to put up capital for land. For many investors who missed the very best bargain prices from the “original” financial crisis, we may very well have “round two” when it comes to tremendous buying opportunities.

Carpe Diem – Now Is the Time

If you’ve been on the fence about whether to invest in residential real estate, or wait for a better opportunity, I’d love to chat with you. I promise I won’t twist your arm or push you towards a decision. I just want to make sure you understand the opportunities that this market offers.

There may never be a time quite like today when demand is improving and supply is still cheap and attractive. There’s something very special about an environment where you can buy cheap and sell dear – at the same time!

Would you give me a call this week so we can discuss these tremendous opportunities? I would love to help you profit from this unique market environment.

Wishing you every success,
Matt

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

Positive Report for New Home Sales

Investors and Colleagues,

This week we received the Commerce Department’s report on new home sales for the month of September. The data was very encouraging…

For the month, new home sales increased by 5.7% – the first monthly increase we have seen since early spring.

An increase in new home sales does two things for the residential real estate market. First, it helps to reduce the inventory of new homes currently offered for sale. As the supply of new homes decreases, prices will naturally rise. Think back to your high-school economics class and those supply / demand curves. Whenever you reduce the supply, all other things being equal, you see an increase in the price…

The second issue is the effect that this report has on residential developers. When the rate of new home sales picks up – and when new home inventory begins to drop, this is an important signal to developers that it is time to begin building.

Over the last three years, these developers have worked hard to decrease their inventory. It’s expensive to hold on to large tracts of land and wait for the market to pick back up. Developers have to pay taxes, maintain the properties, and cover overhead expenses – whether the real estate market is hopping or not.

Many of our local developers have allowed their land inventory to dwindle, waiting for the right time to step back into business. This month’s new home sales report may be just the catalyst they need to begin negotiating to buy land – and it’s likely that when they start to look for good opportunities, the best lots will be those that Ashford Capital already owns – the very same properties that you are invested in…

Mortgage Relief Adds Another Catalyst

There’s one other big issue that has surfaced in the last week. On Monday, the Fed announced revisions to their mortgage refinance program which is designed to help homeowners arrange better terms for current mortgages.

The health of current homeowners is very important to us as real estate investors – even though our primary focus is on new homes.

In order for the new home market to improve, we need to see a parallel improvement for existing homeowners. If the default rate continues at a very high level, it will mean more existing homes on the market. The prices of these homes are typically very low – enticing buyers that would typically want to invest in a new home to consider fixing up a foreclosure.

If this new mortgage program turns out to be as successful as economists expect, it could be a game changer in terms of a turnaround in the residential real estate market.

According to the Wall Street Journal, this new program will allow 800,000 to 1 million current borrowers to refinance their homes at a better rate. This means lower monthly payments, quicker payoff of principal, and a significant overall boost to the broad economy.

The goal of this program is to allow homeowners to refinance – even if their loan balance is significantly more than the value of their home. So it doesn’t matter how far a homeowner is underwater, he or she should still be able to benefit from this program.

Swift Changes – Time Is Limited

When economic trends shift, they have a tendency to move quickly and catch unsuspecting investors off guard. This can be true because too many people believe one side of an argument and fail to think critically about a number of inputs they might not be considering.

In the case of residential real estate, we appear to be at the beginning of one such transition.
Investors have bailed out of real estate positions. Developers have reduced inventories, banks have foreclosed on properties, and real estate investors have moved on to other things.

But now that most have left this market, prices are very low and the tide is turning. We’re seeing the major home builders like John Wieland, Ashton Woods, and Beazer Homes all making investments in the Atlanta market. Business is picking up and it’s an exciting time to be invested in the recovering residential real estate market.

Are you ready to discuss how Ashford Capital can help YOU participate in this dynamic growth environment? I would love to take a few minutes and introduce you to some of the developments we are currently involved in.

Since each one of our investments covers a specific development, our investment space is limited. Once we fill all of the slots for each investment, the door closes and we move on to find new opportunities.

I want to make sure that you are able to participate in the best deals we are following right now. Don’t wait until the market has moved sharply higher before we talk. Give me a call today and we will figure out what opportunity fits best with your situation.

Wishing you every success,

Matt

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

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