July 21, 2011

Dear Kids,
 
    Most of the Chinese investing in the real estate is when the property value going up instead of going down.  It is because the dollar they invest into the property when the property value going up, the dollar value is going up automatically.   The North American concept is different from what Chinese are thinking.  The best time to invest when everyone is stopping to invest because the price is much different than the booming time.  The only difference for these two concepts are Chinese are speculator and North Americans are investors.  The other deference between the Chinese investors and the North American investors are Chinese are the conservative investor and the North Americans Investors are leverage investors.  Chinese investors are very solid because they are either pay cash or they have a very strong cash flow for their backup in case there is some changes in the economy.  The return for the investment would not be as high as North Americans, therefore, this recession doesn't affect too much to the Chinese investors.  It means they invest according to their limitations.
For example, Chinese investors buy a property 100,000 and sell for 200,000 in a good time by using cash.  Their investment is only has 100% return for their investment with cash to cash base.  When the recession comes, they don't feel anything because there is no liability in the investment. 
    On the other hand, the North American Investors would use 100,000 to buy 10 properties with 1 million and they sell 2 million by selling 200,000 each when the time is good.  Their investment is 1 million better than the Chinese investors.  When the recession comes, they will give up everything and file bankruptcy instead.  You can see who is the best investor and who is the worst speculators.  I met a young fellow who can't even pay the mortgage because he had lost his job abd he was using the creditr card to pay the mortgage until he sold the property in a good time making 100,000.  If he were in the recession, he had already lost the house.  Therefore, you need to know that you are buying the house for the long term or short term.  For the long term, you need to watch your budget and the short term, you need to watch your risk and return.  The other thing you need to know is the the timing because this will determine the supply and demand.  During the election, the price will be good to show the successful of the adminstration of the President or the Prime Minster.  The fexible of the banking financing will also the other important factor to control the supply and demand factor in the real estate market.  The last factor is the most important factor is the location.  This will determine the long term success of the appreciation of the value such as Hong Kong due to the large influx of population from the other countries.  New York and Minnesota are difference in price as well.
 
Love,
James