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US Real Estate May Be The Best Safe Haven

US real estate may be the best safe haven for the moment

By Joel Ross | Updated on June 05, 2011

The black swans continue to darken the sky. There are just so many major events and issues now that the enthusiasm we saw in January has been replaced by another decline in optimism and concern. On the other hand, there is so much cash in so many pockets, that deals continue to happen just because nobody knows what else to do with it all. For the most part, real estate is looking like the good place to be for the medium term. It is off the bottom and if bought right will pay a return in excess of what is otherwise available. There is a solid physical asset that you can see and manage. Barring the unforeseen it will not get affected overnight by events in Yemen, Syria or even Washington.  Values may not go up much in the short term, but the chances of a material decline in value from here are low unless you are over paying for hotels.

The swings in the stock market are substantial on a daily basis and re subject to so many black swan events, that are out of your control, that you never can be sure what the value really is. You have no ability to affect value in any way. The problem now is that core office is likely no longer a good long term investment. It has been bid too high in the race for security with too much cash chasing too few deals. Multi is similarly over priced in some markets for similar reasons and now new development of multi makes sense in some places since the demand is there and often you can build to an 8% cap vs buying at a 5% cap. Mutli is not complicated to construct so the development risk is not terribly high in many markets.

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