You have one city to invest in. Which city and why?

yayaa's picture
Rank: Gorilla | banana points 614

More specifically if possible, which neighborhood and asset type? Value add, development or stabilized play?

Wonder what everyone's investment thesis is regarding the environment we are in today.

You are the President of your own shop and get to call the shots. What city are you buying in?

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Comments (52)

Mar 12, 2019

Phoenix metro.. if I had to get specific, I'd say Scottsdale.

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Mar 12, 2019

Orlando, Tampa, Raleigh.

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Mar 12, 2019

Tampa, FL due to retirement demographics + Water Street project.

Mar 12, 2019

Take a closer look at corporate relocation and median HH income. Tampa desperately needs well paying primary employment - not a lot of lucrative opportunities there unless you become an entrepreneur.

Retirement demographic is great for certain sectors. I think cannabis investments and coastal RV parks in Florida are a phenomenal opportunity, as are marinas.

Mar 12, 2019

Good point.

But aren't you concerned with how transient the income can be from RV parks and marinas? Your tenants can literally drive away overnight for any reason...Plus you're targeting very small markets, how many people own boats and RVs? Finally, its going to be a pain to exit those investments...

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Mar 12, 2019

High-end trailer/RV parks in/around Phoenix and Boise to play off of the future massive migration out of California once Communism fully takes root.

Brothel in Midland, Texas.

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Mar 12, 2019

Why trailer parks there? I've seen a lot of people sell their condo/ small SFR in Cali to go buy a big ass house in Arizona/ Texas.

Mar 12, 2019

Its a play off of the affordable housing crisis in America. I don't see construction costs dropping anytime soon, so more people will be forced off the spectrum into mobile/manufactured housing. The average baby boomer doesn't have $100k+ in home equity...

If only I could find a way to fund $10m+ of LP equity into the space... My fund is completely sold on the thesis.

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Most Helpful
Mar 12, 2019

Everyone's assuming they're limited to the US. The best returns are going to be places in the developing world:

Africa: huge population boom and migration to urban areas. Lagos, Ouagadougou, Dar es Salaam, Kampala, Lusaka, Luanda, etc. Near term returns may not be the best, but sitting on land plots for the next decade or two will bring in huge profits, assuming you can keep stability. High risk and high reward.

Central/South America: population already centralized in the urban areas, but rock-bottom prices and similar growth potential to Africa. San Salvador, Bogota, Cartagena, Guyaquil and Quito, Guadalajara, Juarez, Tegucigalpa, Guatemala City are the poor but rising cities. Mexico City, Sao Paulo, Santiago, Lima, Panama City, Buenos Aires are the established players that keep growing. As the majority destitute-poor populations slowly rise into the middle class over the coming decades having footholds in these cities will pay off big time, though similarly unstable risks as Africa.

Personally, Luanda, Dar es Salaam, and Sao Paulo are my top choices for best future returns on investment.

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Mar 12, 2019

Huge risk. If that was the case, Blackstone would be all over these areas and other funds as well.

Sam Zell also specifically mentions in his book to steer away from the emerging markets. Too much political risk. He regrets entering the Latin American markets etc.

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Mar 12, 2019

I certainly haven't visited every locale I mentioned, but from the cities I have I can say that it really matters having local connections. These are places where knowing the right governing officials and local power brokers matters, and one won't get far otherwise. If you do have their blessing, however, the fruit is ripe for the picking.

Mar 12, 2019

Rule of thumb is that if the country's flag has green on it... caveat emptor. Not saying I agree with it, but it isn't bad advice.

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Mar 12, 2019

I heard it best from a pretty decently sized International REPE player. He said whenever he goes down to Latin America markets to look at investments down there everyone only ask him about how to invest their money back in the US.

He was saying that is very worrisome to a potential investor.

Mar 12, 2019

Have you seen this video?

It features this guy.

I think Africa > South America: The US is too focused on internal squabbling to worry about South America, and the Chinese are pouring huge amounts of NSA capital into Africa, and therefore have a vested interest in maintaining regional stability (the Chinese need inexpensive, low-skilled labor to replace themselves).

Mar 12, 2019

The Chinese need resources, not labor. Africa is rich with commodities.

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Mar 13, 2019
lumber_cruncher:

Personally, Luanda,

Having been there, I believe that the economic prospects were way over-hyped. With the stagnation of oil and the bust of Banco Espirito Santo, the country has its challenges.

Mar 14, 2019

Dar es Salaam more like Dar es Mycockinjanetyellen amirite boys

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Mar 12, 2019

If I had to start over, I'd say probably one of the warmer weather states major metros. They seem to have a lot of in bound migration these days.

I'd also avoid any city that levies a city income/gross receipts tax.

Mar 13, 2019

Oakland has been the belle of the ball this cycle...

overpriced at this point.

Mar 12, 2019

It's almost as if growing taxation/bureaucracy is negatively correlated with population growth...

Mar 12, 2019

Development in any major southern (southeast or southwest) city. Since I have to pick one and don't feel like being a homer, I'll go with mixed use in Dallas.

Mar 12, 2019

Too late to join that party...

Mar 12, 2019

Lagos(due to Eko Atlantic project) and Accra. Growing metropolitan cities located in West Africa with established urban populations.

Mar 12, 2019

Vietnam, Indonesia, Myanmar in order of least-most risky.

Mar 18, 2019

Vietnam sounds fun, Myanmar sounds... like a dumpster fire, except it's shooting at you

Mar 13, 2019

What is the investment horizon? 5 years? 10 years? 50 years?

Mar 13, 2019

The year after Chicago defaults and the dust on the property tax situation settles, ChiTown is going to be a great long-term investment.

Mar 12, 2019

Can you expound on this?

Mar 13, 2019

Not directly related to this, but I was personally thinking about the food needs in a lot of emerging markets (specifically South America and Africa), and was just thinking about the freight rail network around Chicago. If that could be expanded upon with more competitive infrastructure to reach ports in the South, which could then ship to much of the developing world where agricultural output isn't necessarily as robust or efficient as it is in the Midwest (or at least won't be in the mid-term), there could be a lot of opportunities related to that. I don't know enough about transporting agricultural products across vast distances like that though.

Mar 13, 2019

At this point in the cycle - I'd buy really good, defensible real estate. Areas with high barriers to entry and low supply (like coastal CA). Less upside but less downside risk too. Lever up 5x if you want to juice returns but at this point in a 10 year cycle you should be thinking "how will this perform in the next recession?" imo.

Mar 13, 2019

Crystal City, Virginia - 5 miles from DC, which means jobs in the federal government keep the area afloat during recessions and with the new amazon HQ being built there....this area is going to explode.

Mar 13, 2019

anywhere where you can get this and have limitless potential

Mar 15, 2019

My bet would be Metro Detroit. Very high end suburbs, growing industrial markets, downtown is seeing a ton of investments from many large companies... especially Quicken Loans (Dan Gilbert). You can still get ROC year 1 north of 10% on stabilized deals.

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Mar 12, 2019

Any good brokers to talk to based out of there?

Mar 15, 2019

What property type?

Barry Swatzenberg (spelling?) @ CBRE is good for about anything. However Jim Montgomery at Signature knows everyone as well.

Mar 19, 2019

Atlanta and the South in general. Jobs are rapidly growing down south and people are following. Warmer weather to boast too. Cheaper living. Better taxes.

The rich in high tax states will eventually get tired of being taxed excessively and move down south. As those families move out, the states will have to raise taxes to compensate, forcing more rich families to leave. Some 180,000 families in California alone are responsible for nearly 50% of income taxes paid and nearly 1/3 of tax revenue. Once they start to leave, California will finally implode on itself.

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Mar 20, 2019
TheDebtStar:

Atlanta and the South in general. Jobs are rapidly growing down south and people are following. Warmer weather to boast too. Cheaper living. Better taxes.

The rich in high tax states will eventually get tired of being taxed excessively and move down south. As those families move out, the states will have to raise taxes to compensate, forcing more rich families to leave. Some 180,000 families in California alone are responsible for nearly 50% of income taxes paid and nearly 1/3 of tax revenue. Once they start to leave, California will finally implode on itself.

Don't you think your about 30 years too late on this call? This is already happening. And as pointed out by many people on older threads, people aren't rational actors and make decisions based on things other than net take home pay. There are reasons to live in NYC or California or the northeast in general that go beyond "how much are my taxes" and many of those won't change.

For example, Florida may be a magnet for retirees because of its tax/bankruptcy laws and its weather, but the school system is one of the worst funded and under-performing in the country. Liberal states tend to have vastly better school systems than conservative ones, in large part because more money gets allocated. I'd argue that for professionals with kids (which is obviously a large population), school quality is equally important as tax burden.

Mar 12, 2019
Ozymandia:

Don't you think your about 30 years too late on this call? This is already happening.

Still a long way to go in Atlanta

Mar 20, 2019
TheDebtStar:

The rich in high tax states will eventually get tired of being taxed excessively and move down south. As those families move out, the states will have to raise taxes to compensate, forcing more rich families to leave. Some 180,000 families in California alone are responsible for nearly 50% of income taxes paid and nearly 1/3 of tax revenue. Once they start to leave, California will finally implode on itself.

Imagine sincerely believing this

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