I read an interview with Warren Buffett the other day and it helped reconfirm the optimistic feelings that I’ve had. I know it’s a challenging financial market out there and everyone wants to spell doom and gloom but this is one of the best times to take a step back, evaluate the situation, avoid the hype, and see what the experts are doing. One of my favorite quotes from Warren Buffett is:

“Be Fearful when others are Greedy and be Greedy when others are Fearful” ~Warren Buffett

Tell me that isn’t relevant in this market and very relateable to the real estate market. Guess what Warren Buffett is doing? Following his own advice by investing $5 billion in Goldman Sachs on September 23 and $3 billion into GE on October 1st. Does that sound like someone that’s scared about where the market is going or someone that is confident about where the market will go and excited about the sale on investments?

What does Warren Buffett say about the bailout plan, besides it being an unfortunate name, is that while not perfect, it’s going to do what it was set out to do. He also said that he believes in it so much that given the opportunity to invest 1% into the deal, he would invest the $70 Million dollars as a sound investment because he feels like it is the type of deal he likes to invest in and will make a great return. Merrill Lynch just sold mortgage-related assets at 22 cents on the dollar and this is the same type of products that the government is buying. It’s a great power play buying discounts at already discounted prices on these assets and he states that these are the same type of assets that hedge funds are buying for 15%-20% returns on their investment. The biggest advantage that the Federal Government has is their low cost of borrowing. They can borrow money cheaper than anyone else and hold on to the assets longer than anyone else to sell them at a higher price.

Where does this leave you as a Detroit real estate investor? Well, with the frenzy that has been created lately, the drop in the stock market, and uncertainty by the herd, it’s a great time to follow the master and start investing. Action has been taken to stabilize and start to grow the economy and it sounds like the right steps have been taken. The time to act is now to take advantage of low prices before everyone else starts to see it when the economy stabilizes. Unless you’re a stock market guru to make big power plays on assets that you know are undervalued, it’s time to look at assets that are much easier to value. Hard asset in real estate that cash flow numbers are easy to calculate.

Detroit Investment Properties continue to be an excellent investment for cash flow and long term upside potential. If you’re on the fence, you need to talk to the experts that are investing day in and day out in the area. We are available to answer any questions, provide recommendations for excellent contractors and property managers, and show you the best areas to invest in. Read our Detroit Real Estate FAQ to review information on
Detroit wholesale properties.

Successfully Yours,
Jared Pomranky
Detroit Market Expert

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