Sunday, May 24, 2009

Book Review of "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."

I picked up the book "After the Fall" by Steve Bergsman about a month ago and have enjoyed reading it during my down time. The book is well rated at Amazon getting 5 of 5 stars averaged across seven reviewers. In my opinion, the book is appropriate for investors interested in Real Estate Investment Trusts (REITs), developing a multi single family home portfolio, commerical and/or industrial real estate. Some of the points I gleaned from the book.

* Industrial market. I liked the author's analysis noting that "just about every major retailer and distributor in the United States has been shifting to a regional instead of a local model and that requires huge centers of distribution." He goes on to integrate references to the "Nafta Highway" (I-35) and railroad hubs in explaining strategies for investing with particular emphasis on distribution centers and also highlights supply chain location winners.

* Multi-Family real estate. The author explains why 2012 or 2013 should mark the switch from a "tenant's market" to a "landlord's market."

* Single-Family homes. I found the author's discussion of new household starts and annual house demolitions as useful in establishing an underlying need for 1.6 to 1.8 million in home purchases a year. In my opinion, this underlying need will work through the current 9.8 month supply of unsold inventory. The author goes on to mention that the single-family market "won't get back to normalcy at least until 2011." He then goes on to explain what he expects investors should expect for realistic returns from 2011-2015.

* The Condominium market. I found the author's use of valuation ratios similar to how I have previously used cap rates in valuing my investment properties. The author emphasizes that the time to buy is when construction starts grind to a halt and provides his estimated date for this to occur.

* Six year rule. Discusses this rule of thumb for the length of time between the start of real estate market crashes and when price stability arises.

* Discusses typical strong areas for real estate. For example, it is already known that beach front property is valued highly because of its scarcity. But, I never consider properties boardering State & National Parks as scarce. In my opinion/analysis, there is an element of scarcity in that if your property borders a park, you shouldn't expect people to build behind you in the park but at a further distance from the park where the scenic value trails off.

Other areas discussed in the book include:

* The Retail Real Estate Sector
* The Office Market
* Commerical Real Estate Sustainability
* Market for Distressed Real Estate and Loans
* Home Insurance and Property Taxes
* Urban and Suburban Infill
* The Market for Second Homes
* The Market for Vacation Properties

If you are on the fence as to whether or not to buy this book, I recommend you pick up the book at a bookstore and read pages 191 to 193 at the book shelf. These three pages are used as the author's cliffnotes on the book. While he doesn't divulge quantatitive info here, he discusses his general opinions on the major real estate sectors. After you see his opinions across these pages you can then determine how closely his views align with yours, or if you are still forming your own opinion, whether or not his comments grab your interest.

Below is an Amazon book carousel. Included in it are books that I have read and recommend ("When Giants Fall," "Complete Tightwad Gazette," "Exchange Up," "After the Fall.") and books on my Reading List ("The Bull Inside the Bear," and "48 Laws of Power").

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