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Tuesday, January 22, 2013
For a long time, I've been looking for an easy way for you to invest in residential real estate.
Real estate is the best value it's been in U.S. history... Record-low mortgage rates make housing more affordable than ever... And you have built-in inflation protection as rents and real estate prices tend to rise a bit faster than inflation.
The problem is, there aren't a lot of easy ways to own real estate... But I have an excellent opportunity for you today...
If you aren't in the market to buy a house or rental property, this company has already done the dirty work for you... It's bought over 10,000 American houses since the real estate bust. Plus, the stock is so cheap, you have a legitimate shot at 100%-plus gains from here.
Let me explain...
Buy it. Fix it. Sell it.
That's the simple residential real estate strategy of the Blackstone Group (NYSE: BX).
Blackstone has poured billions of dollars into the market... buying up thousands of homes at dirt-cheap prices, fixing them up, and then selling them for a profit.
This company is the very best way to get invested in residential real estate THROUGH the stock market – with significant upside potential.
Blackstone started out in the 1980s as a private-equity group (like Mitt Romney's Bain Capital). But it has evolved into one of the planet's biggest "alternative" asset managers. ("Alternative assets" means it's not investing in your typical stocks, bonds, and mutual funds.) Basically, people pay Blackstone to manage their money for them.
Today, Blackstone is buying up residential real estate and putting its "Buy it. Fix it. Sell it." strategy to work...
Blackstone has purchased roughly $1.5 billion worth of houses. It owns around 10,000 homes at an average purchase price of $140,000 to $150,000 per house.
The company is also renting out these homes. In a recent conference call, Blackstone's founder, Stephen Schwarzman, explained, "We're taking foreclosed homes, and we're renting to people. It is only taking 26 days from when we put a house on the market until somebody goes into it."
In fact, Blackstone is piling into the housing trade in every way possible. Schwarzman continues...
Blackstone has committed $17.6 billion to real estate since 2009... making it the biggest investor in the world in this market.
It's important to note that by buying Blackstone shares, you're NOT investing directly in the company's real estate portfolio.
Blackstone invests on behalf of investors and gets a big percentage of the profits if it's right. So if Blackstone's bets pay off, it collects huge "performance" fees. But even if its bets don't work out, Blackstone still collects fees. The business wins no matter what. And you win as a shareholder.
I recommended Blackstone Group to my True Wealth subscribers in November. The stock is already up 31% since my write-up. And it's still a buy. Even after a recent move higher, Blackstone is dirt-cheap... trading for less than 8.5 times this year's earnings.
I believe this ratio will continue to rise as investors realize the quality of Blackstone's assets. Increasing earnings and a higher multiple mean Blackstone could ultimately trade for $36 in the next two years. That's 100%-plus higher than today's price.
Going forward, as more and more investors understand that Blackstone has placed so many of its chips on real estate, I expect its share price will act more like a leveraged bet on U.S. real estate... And that's exactly why I'm interested.
If you're looking for an easy way to invest in residential real estate, Blackstone is the answer.
The company could double your money in as little as two years.
With record-low mortgage rates, Steve is calling housing the best deal in the investment world today. "If you want to find a below-market deal, you'd better get out there and find it, now," he writes. "The window of opportunity is closing fast." Read more here: GET ON IT! You've Almost Missed It in Florida Real Estate.
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S&P 500... highest level since 2007
Berkshire Hathaway (BRK)... Buffett's holding company
American Financial Group (AFG)... insurance
Travelers (TRV)... insurance
Alleghany (Y)... insurance
Medtronic (MDT)... medical device maker
Becton-Dickinson (BDX)... medical devices & supplies
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Pfizer (PFE)... Big Pharma
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News Corp (NWS)... newspapers
Constellation Brands (STZ)... booze
Amazon (AMZN)... online retailer
eBay (EBAY)... online auctions
Monsanto (MON)... agriculture
3M (MMM)... manufacturing
Two Harbors (TWO)... mortgage REIT
iShares Home Construction (ITB)... housing recovery
Union Pacific (UNP)... railroads
Plum Creek Timber (PCL)... timberland
St. Joe (JOE)... real estate development
iShares Germany (EWG)... German stocks
iShares Italy (EWI)... Italian stocks
iShares Australia (EWA)... Australian stocks
iShares Hong Kong (EWH)... Hong Kong stocks
iShares Mexico (EWW)... Mexican stocks
Guggenheim Airline Fund (FAA)... good for America
NEW LOWS OF NOTE LAST WEEK
Not many... it's a bull market!
In The Daily Crux