The Hindu Business Line : There's no `right' property

You can build wealth the `real' way, assures David Lereah in `All Real Estate is Local' (www.landmarkonthenet.com), a book that outlines the steps that your strategy should have for the purpose.

First, create a local real estate team. "You can't do it alone. You are going to need assistance from people who know real estate and know the local marketplace. Leverage as much as you can off experienced real estate professionals. Your real estate agent is your first source of information and guidance."

The next step is to compare local market DNA. Lereah lists many `notable characteristics that influence real estate DNA' including: mountains, water, climate, diversified economy, job situation, education, hospital, recreation, parks, transportation, government, professional sports teams, culture, affordability, safety and so on. While human beings are stuck for life with their DNAs, `real estate DNA can change over time'.

Determine your investment horizon, the author counsels. "If you are looking for short-term gains, invest in the stock market; real estate is not for you." The typical holding range for real estate is five to ten years, he says.

Expand your real estate investment beyond your own home, suggests the book, in the interest of diversification. "Don't put all your money into one real estate investment. If it turns sour, you could lose a great deal of money." Another useful tip is that you should be able to afford the property you are buying. "If you do not have enough funds for a sufficient down payment, wait until you do."

Those who can afford may aim at purchasing `a minimum of one property per year.' A consistent goal among many successful real estate investors, says the author. "The intent is to force you to build up a portfolio of properties." The most important tip that the book wraps with is that all real estate is local. "There are always buying opportunities in the real estate markets. You just have to keep your focus on local activity in the regions and neighbourhoods in which you are interested in buying."

There is no `right' property, reminds Lereah. "You can apply all the fundamentals in a rational manner to ensure that you are paying a fair market price, but the property and its location are a personal and subjective decision."

Valuable guidance.

Brewing profits

"For nearly twenty-five years, I've made my living as a financial journalist and yet the stock market continues to mystify me," writes Karen Blumenthal in `Grande Expectations'. The author, who has served for about two decades at The Wall Street Journal, `pulls back the curtain on the stock market to expose its quirks and inner workings', and pens a `fly-on-the-wall' narrative of a year in the life of Starbucks' stock.

After GE, Starbucks ranks second in Fortune's `Top 20 Most Admired Companies'. Had you invested $1,000 in Starbucks stock when the company went public in 1992, it would have turned to nearly $53,000 by the end of 2006, as against a mere $3,500 for the S&P 500. A return of more than 5,000 per cent!

"Just two decades ago, the lowly cup of coffee was barely a notch above tap water, something you expected to be widely available at airport terminals, auto repair shops, and night time school meetings. Even if most of it was rot - weak, flavourless, and nearly see-through - it was cheap," writes Blumenthal in the intro. "Then Starbucks swept across the US and suddenly people from coast to coast were standing in line to plunk down up to $4 for a coffee-and-milk concoction served by a cheery barista in a green apron."

Starbucks has nearly 10,000 outlets, and operates in about 40 countries. It has plans to increase to 40,000 locations worldwide, with 10,000 new stores planned in the next four years. Fiscal 2006 and the first quarter of fiscal 2007 saw 2,199 and 728 store openings respectively, informs www.starbucks.com.

If you fear whether there can be too many coffee shops, here are some numbers to help. One shop per 25,000 people was the earlier thinking. The number fell to 10,000-15,000 people, when Starbucks and competitors proliferated. The book cites ePodunk.com to state that Falls Church, near Washington DC, with a population of a little more than 10,000, and Katy, near Houston, with about 12,000 people, each have 8 Starbucks in town, `making them perhaps the most caffeinated suburbs in the US'. A book to accompany a cup of you-know-what.

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