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Presented by: Jacob Segal Investors Research Group An Overview of Real Estate in the United States and Romania
<ul><li>The Economy – General Comments </li></ul><ul><li>Sub-Prime/Credit Crisis </li></ul><ul><li>Housing and Foreclosure...
<ul><li>Is recession a realistic scenario? </li></ul><ul><li>Long term structural fundamentals with real estate implicatio...
<ul><li>Definition </li></ul><ul><li>2008 – $1.8 trillion of adjustable rate mortgages (ARM) scheduled to adjust </li></ul...
<ul><li>Through the 90’s, the multiple of price-to-rents nationwide was 14-15X </li></ul><ul><li>By 2007, it jumped to 24X...
<ul><li>Sectors: </li></ul><ul><ul><li>Multi-family </li></ul></ul><ul><ul><li>Shopping Centers </li></ul></ul><ul><ul><li...
<ul><li>Location, Price, Leverage, Management, Timing </li></ul><ul><li>Real estate is not a national market/single asset ...
<ul><li>Growth today </li></ul><ul><li>10 most likely population growth areas: </li></ul><ul><ul><li>Phoenix – Mesa, AZ </...
<ul><li>“ Investment Grade” country </li></ul><ul><li>Sectors that will attract foreign investments </li></ul><ul><ul><li>...
Exhibit A – Buy vs. Rent Qualitative analysis: Having a home gives you control over your space, appreciation, equity build...
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An overview of Real Estate in the US and Romania

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Real Estate presentation to Romanian American Professional Network

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An overview of Real Estate in the US and Romania

  1. 1. Presented by: Jacob Segal Investors Research Group An Overview of Real Estate in the United States and Romania
  2. 2. <ul><li>The Economy – General Comments </li></ul><ul><li>Sub-Prime/Credit Crisis </li></ul><ul><li>Housing and Foreclosures </li></ul><ul><li>Commercial Real Estate </li></ul><ul><li>Jacob’s Ten Commandments </li></ul><ul><li>Summary </li></ul><ul><li>Romania – Real Estate </li></ul><ul><li>Exhibits </li></ul>Overview
  3. 3. <ul><li>Is recession a realistic scenario? </li></ul><ul><li>Long term structural fundamentals with real estate implications </li></ul><ul><li>Real Estate Cycle vs. Stock Market Cycle </li></ul><ul><li>Property sectors </li></ul>The Economy
  4. 4. <ul><li>Definition </li></ul><ul><li>2008 – $1.8 trillion of adjustable rate mortgages (ARM) scheduled to adjust </li></ul><ul><li>NINJA Loans </li></ul><ul><li>Comparison to the 90’s S&L Crisis </li></ul><ul><li>2008-2009 Expected Defaults </li></ul><ul><ul><li>$200-$300 billion </li></ul></ul><ul><li>2 million homeowners lose their homes </li></ul><ul><li>It’s the Collateral, Stupid! </li></ul>The Sub-Prime Lending
  5. 5. <ul><li>Through the 90’s, the multiple of price-to-rents nationwide was 14-15X </li></ul><ul><li>By 2007, it jumped to 24X </li></ul><ul><li>Prices substantially outpaced the earning power of the borrowers </li></ul><ul><li>Bubble markets  CA, AZ, NV, FL </li></ul><ul><li>Speculators bought one out of every four homes bought in the last three years </li></ul><ul><li>Between 2007-2009 </li></ul><ul><ul><li>7-8 million sub-prime borrowers </li></ul></ul><ul><ul><li>2 million foreclosures </li></ul></ul><ul><li>Based on current inventory, it should take 3-5 years to absorb the new homes and condos </li></ul><ul><li>Expect prices to decline 15% (average nationwide) </li></ul><ul><li>Good websites: </li></ul><ul><ul><li>www.homesales.gov </li></ul></ul><ul><ul><li>www.realtytrac.com </li></ul></ul><ul><ul><li>www.foreclosure.com </li></ul></ul><ul><ul><li>www.zillow.com </li></ul></ul><ul><ul><li>www.housingtracker.com </li></ul></ul>The Current Housing/ Foreclosures Reality
  6. 6. <ul><li>Sectors: </li></ul><ul><ul><li>Multi-family </li></ul></ul><ul><ul><li>Shopping Centers </li></ul></ul><ul><ul><li>Offices </li></ul></ul><ul><ul><li>Industrial </li></ul></ul><ul><ul><li>Hotels </li></ul></ul><ul><ul><li>Senior Housing </li></ul></ul><ul><ul><li>Student Housing </li></ul></ul><ul><ul><li>Storage Facilities </li></ul></ul><ul><ul><li>Mobile Homes </li></ul></ul><ul><ul><li>Land </li></ul></ul><ul><ul><li>Triple Nets (NNN) </li></ul></ul><ul><li>Commercial market characteristics </li></ul><ul><li>Participants in the commercial real estate market </li></ul><ul><li>Risk profile </li></ul>The Commercial Real Estate Market
  7. 7. <ul><li>Location, Price, Leverage, Management, Timing </li></ul><ul><li>Real estate is not a national market/single asset class </li></ul><ul><li>Real estate is an imperfect market </li></ul><ul><li>Real estate is local. Capital is global. </li></ul><ul><li>All markets have pockets of good deals </li></ul><ul><li>If you can’t find a “Good Deal” , be patient. Look for fundamentals e.g. population growth, employment, price. </li></ul><ul><li>Invest, don’t speculate. Real estate is a long term investment; the profit is made in the buy-side </li></ul><ul><li>Be prepared to “add value” </li></ul><ul><li>Follow the sun, affordable housing, job growth  Go West, Young Man. Southwest. </li></ul><ul><li>JUST DO IT. </li></ul>Jacob’s Ten Commandments
  8. 8. <ul><li>Growth today </li></ul><ul><li>10 most likely population growth areas: </li></ul><ul><ul><li>Phoenix – Mesa, AZ </li></ul></ul><ul><ul><li>Los Angeles – Long Beach, CA </li></ul></ul><ul><ul><li>Las Vegas, NV </li></ul></ul><ul><ul><li>Orange County, CA </li></ul></ul><ul><ul><li>Houston – Harris County, TX </li></ul></ul><ul><ul><li>Miami – Dade – Fort Lauderdale, FL </li></ul></ul><ul><ul><li>Riverside – San Bernardino, CA </li></ul></ul><ul><ul><li>San Diego, CA </li></ul></ul><ul><ul><li>Dallas, TX </li></ul></ul><ul><ul><li>Albuquerque, NM </li></ul></ul><ul><li>Look for: stable, safe places, state capitals, college towns </li></ul><ul><li>Expect: </li></ul><ul><ul><li>cap rates to rise </li></ul></ul><ul><ul><li>risk to be reprised </li></ul></ul><ul><ul><li>sustainable development will continue </li></ul></ul><ul><ul><li>uncertainty = opportunity </li></ul></ul>Summary
  9. 9. <ul><li>“ Investment Grade” country </li></ul><ul><li>Sectors that will attract foreign investments </li></ul><ul><ul><li>Manufacturing </li></ul></ul><ul><ul><li>IT – Telecom </li></ul></ul><ul><ul><li>Tourism </li></ul></ul><ul><li>30 billion Euros to be spent on infrastructure over the next 10 years </li></ul><ul><li>55% of the population of 22 million live in urban areas – currently, there is a need for 800,000 new homes (excess demand) </li></ul><ul><li>Buy Land: </li></ul><ul><ul><li>Bucharest </li></ul></ul><ul><ul><li>Cluj </li></ul></ul><ul><ul><li>Iasi </li></ul></ul><ul><ul><li>Constanta </li></ul></ul><ul><ul><li>Brasov </li></ul></ul><ul><ul><li>Timisoara </li></ul></ul>Romania
  10. 10. Exhibit A – Buy vs. Rent Qualitative analysis: Having a home gives you control over your space, appreciation, equity build-up, refinancing power, cash flow from renting -$31,500 -$32,614 After Tax Out of Pocket -1,000 -3,000 Insurance 0 -1,800 Maintenance 0 -900 Landscape 0 9,675 Tax Savings (30%) 0 26,000 Interest Deduction 0 -6,250 Real Estate Tax -36,000 0 Rent 0 -30, 339 Payment (PMT) 5,500 0 Cash Flow (CD at 5.5%) 0 400,000 Mortgage 100,000 100,000 Equity 0 100,000 Down Payment $0 $500,000 Purchase Price Apartment Home

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