Is Real Estate Investing a Good Bet Now?
Billionaire Investor Jeff Greene on the opportunities in real estate investing.
- Duration 6:38
- Date Jun 8, 2011
Billionaire Investor Jeff Greene on the opportunities in real estate investing.
Also in this playlist...
This transcript is automatically generated
Next guest is truly living his version of the American dream he grew up in a modest household paying for college.
By selling circuits tickets over the phone but some huge bets in real estate.
Help -- his life forever both against and four with the network now of close to two billion dollars of a slot on the Forbes list.
Of top billionaires we want to know where is his next bet -- places.
Hearing that would be exclusively here on Fox Business billionaire investor Jeff -- you're always talked about -- the guy who first traded credit default swaps.
Tell you how you view the real estate market.
Now when we keep seeing prices continue to fall and bottom and we don't see any turnaround here well look let's there was such a huge overhang for so many years -- Overbuilding access America's construction that you can not it's not gonna just be picked up just like back.
I think that the problem now is it just isn't -- -- problem now is that there is.
You know the expectations that there's going to be a certain date like for real stable get better but I think what's gonna happen is just gonna grind away through this inventory -- mean the truth is like the housing.
We this three million new Americans every year so.
You know another few years and another ten million Americans -- even if 10% of unemployed or 9% of unemployed the other 9091%.
You to get -- If so virtually all of these -- will get purchased all the proposals go away and housing market recover and that'll be good for our economy -- little -- you know number construction jobs you.
All sub prime mortgages and that's how you major pay billions how do you feel about real estate investment right now reform what are pouring money in.
Yeah I mean I wish I made my first real -- investments during the last year and at first first in seven years goes.
I think we're turning the corner and we look if you we were I'm based in Florida Florida's obviously ground zero for the real estate bust and that's that's a mass in every every year you think we the two years as everyone thought there was stealing things that -- -- replacement costs -- there.
60% approved by 40% of replacement costs but the truth is that at some point.
All of these homes we'll get bought in there will be new new construction remarkable comeback so I think that condominiums will do better.
A rental house will do better.
Commercial buildings will be better.
Because look it's very simple that people are gonna look back on today as being the golden day -- -- doesn't buy things and I think I -- -- find 2011 when I can be squeezing low interest rates.
Buy properties priced at third to half replacement costs -- now's the time to get.
You thought hotel recently in Florida that was distressed -- away what else are you looking at are you looking a plain Vanilla condos and housing and in Florida we we we know we have acquired what's called a fractured Condo was a condominium building didn't give an example -- was -- -- two -- 360 units.
A hundred had been sold it to -- to a 50000 average per unit.
We bought the other 260 -- -- 5000 unit.
Now we're correcting amount -- getting a cab operator -- -- return our investment of over 9%.
And I think ultimately those will be worth of 250 -- -- it may not be in a year or two but it you know 45 years if you look real estate.
Is cyclical its long term.
It can't be thinking what's gonna happen three months six months -- have to rethink what's -- three years six years okay tomorrow the next couple months would you buy more.
Absolutely on the right opportunities I think this is an excellent time be getting involved interest rates are lower than they've ever been.
So that's your view on real -- have to get your view on another investment that we were this is it.
Anti defamation league dinner and I'm sitting here -- I think what what's your next big bet and you sent tobacco bonds that you're investing.
In tobacco bonds because the yields were so good yeah how does this work so that they can the average investor -- Absolutely -- -- available in very small the nomination this is no institutional trade like sub prime mortgages anybody can buy them in what kind of happen when I saw you was.
-- all the negative publicity on municipal bonds and states and counties and and that cities having problems you know people available all tax free obligations and so it happen is tobacco bonds.
Got went to the point where they were yielding at that time 91011%.
Triple tax rate.
And they're rated you know double B or better.
And now I think today whether priced you know -- a half percent you can buy that patented tobacco bonds of California New Jersey Ohio.
And you know in in it has a lot of research available on the investment front.
We just threw up these Golden State that here's -- -- five point 12%.
He'll look at the Golden State bonds down below five point 75.
But -- tobacco assets which is a state of Ohio and you've got I guess after taxes about what seven point 6% and then you've got the New Jersey yield of eight point 26 after.
-- I think those yields -- those of the yields on the bonds but they're priced much lower than that are priced at par.
So I think that if you actually pricing on most of these sponsor they're really in the -- so the after tax shield in the 1213%.
You know some people have a moral hazard on and I -- thought of myself you really -- -- hope that people smoke more cigarettes you can make money.
But the truth is the way these -- price -- price with the assumption that we're gonna happen I think 3% a year decline in cigarette consumption which I'm happy for you know for America.
And -- if that happens you know.
-- still do just fine.
He's still getting a decent yield way better than for example a CD at your bank right.
It would look there's lots of things you can do today besides CDs impacts on the need to buy preferred stock in Bank of America and make up.
With that the coupon Q preferred which are taxed at the 15% dividend rate -- six and a half percent today and he -- In at -- nobody thinks BofA is going bust anymore we were asking you for your stock picks and the US important some pretty popular ones like for example apple -- position there but.
Wells Fargo was something you're looking -- right now and CE back what do you like about Citi.
Bob -- there if you look at their of their book their book where our price to book value it's excellent even look at their capital.
The capital that's excellent I mean they're just really in in their their franchise all over the world I mean.
It's not just city's Citi Bank of America.
Wells Fargo I mean these these banks when this economy does finally kick into gear which will happen.
These are all gonna be you know big big -- I think these stocks are gonna be.
Priced much much different in -- today that should go JPMorgan cognitive deficits fits in the same same category that you shouldn't have to -- the best businesses in the in the world on a down day are you buying these names.
And I'm already pretty well I'm a pretty well -- investors actually in in the financial sector person -- I'm not I'm not having -- but I but I would be if our effective as part of -- as we finish up double dip recession people are to this country they worry about whether it will raise the debt ceiling and all that's going on inside the beltway how much credence do you put into the worry that there.
Look I -- Extremely worried long term I think that we -- gone with the race to the -- graced the bottom.
Not taking care of people with the basic needs and providing jobs for Americans is a big problem in the short term.
We're cyclical economy I think we're gonna work our way through this area Jeff -- billionaire investor -- what -- -- think is just carcasses investor -- happen.
It's great to see you thank you so -- actually -- we appreciate it come back again.