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“What Value From Utility Change is Next”.   This is a question we should always ask.

This never ending search for the next good value has served me well.  This search led Merri and me to Ecuador in the mid 1990s when real estate values were really low there.  Ecuador was then on the outer ring of emerging communities.  The values changed there as the utility of Ecuador real estate became more useful as an expat center.

portland oregon

Portland, Oregon 1950s image from, Wikipedia

Mount Hood stood directly east, looking out from our front door.  This was the early 1950s, on a dirt road, in an 837 square foot, prefabricated, semi finished house designed for returning WWII veterans.   Semi finished means there was no complete plumbing.  One of my early memories is of the dark and cold in the outhouse during Oregon’s winter months.

Our family home was on  NE 191st.  That’s 191 blocks from downtown Portland or about 13 miles  This was the outer ring suburb.  a small dairy farm and Douglas fir filled woods edged our back yard.  Forests and empty fields stretched beyond, hosting berry farms and bean fields.  Meadow Land and Alpenrose Dairy were nearby.  Fuji Farms offered summer work picking strawberries and raspberries. The soil was rich. the farming was good. The house building was better.

Then the fields were torn up.  Houses were built.  At my age 14 we moved further from Portland to a new subdivision on 198th. This is when I caught a glimmer that the best profits were offered by converting utility at the leading edge.  The great idea then was  to convert the utility of farmland to residential homes.  Later as traffic grew and congestion increased this idea lost value.  By then, at age 20,  in the mid 1960s, I had purchased a house and seven duplexes even further out of town.

That leading edge experience created an appetite, a sense of wonder about “What’s next?”   In the late 1960s, the alure of “what’s round the corner” led me to sell the Portland property and move to Hong Kong, then the leading edge of the emerging global community.

This led me to emerging stocks, then London real estate in the 1970s, then Isle of Man and Naples real estate in the 1980s.  Next in the early 1990s we invested in Dominican real estate and then Ecuador real estate in the mid 1990s.  Finally Central Florida real estate became the what’s next in 2009.

Now this low cost US housing “What’s next?” is gone.

A Wall Street Journal article entitled “Housing Investors Settle Into a Holding Pattern” by Robbie Whelan and Conor Dougherty sums up this fact.

Here are excerpts: After a buying binge that helped drive the housing recovery, big investors are being forced to rethink the home-rental business.

With bargains less plentiful, executives are slowing property purchases and turning their focus to generating steady income from tenants.

A spike in home prices over the past two years was quicker and more striking than many expected, squeezing returns and raising concerns about the industry’s growth prospects.

The companies jumped into distressed markets, buying foreclosed properties and other homes at depressed prices with plans to fix them up, rent them and eventually sell at a profit. But buyers have slowed their pace after acquiring roughly 140,000 homes worth about $20 billion.

The reason: the unexpectedly sharp recovery in the price of homes over the past two years.

“The distressed wave has largely passed,” said Jonathan Gray, head of real estate for New York-based Blackstone, which has spent $8.6 billion on some 45,000 homes and is the biggest player in the sector.

Many investors have decided to hold onto homes for longer than they originally expected because a larger proportion of investor returns is coming from rent instead of the home’s rising value.

Industry executives say there is plenty of money to be made from renting. They say more households became renters after the downturn because of the high rate of foreclosure and the inability or unwillingness of many to buy.

In 2009 we began recommending buying low cost US housing before the big investors crashed the party.  Merri and I bought a number of rental homes in Central Florida from 2009 to now.   We are still looking as bargains always appear in every market, but the big easy profit is now gone.

So the question is, “What’s next?”

What we are seeking is something that is interesting, fulfilling, profitable, good for us and the world health wise and that in some way serves a greater good.

One area of enormous potential is natural health that helps reduce or avoid the high cost of western Medical care. Hence my recommendation on investing in Sandalwood.

Sandalwood’s place within science and scent make it interesting as a medicine and an investment.  

A January message at this site reviewed an analysis of the only public company in the world with sandalwood plantations, TFS Corp.  The analyst felt that the shares have the potential for 1,000% appreciation in the next ten years.

The Australian analyst who visited the site wrote that in a decade TFC could be generating sustainable Earnings Before Interest, Taxes, Depreciation and Amortization A$400m a year.  The calculations imply a potential A$10 share price offering.  The price was A$1.19 a share so a rise in ten years would equate to a 1,000% appreciation.  The price has risen from A$1.19 to A$1.84 since we published the Sandalwood Investing Report.

tfs copr chart

Chart from au.finance.yahoo.com

You can research this business on your own (the company is called TFS Corp. and it is listed on the Australian Stock Exchange) or to save you endless hours and numerous calls to Australia you can order the report at Amazon.com.   The report will retail for $9.99, but right now in its introductory stage it is $2.99.

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See more on the Sandalwood Investing Report 

The sandalwood idea is one small one in the area of agriculture. I am focusing on ideas that combine agriculture, water and multi dimensional conversions.  These are areas in which I feel very confident. To this end I am beginning an update of my 2012 “Invest in Water” report.

Gary

Order the seven part 2012 report on “Investing in Water” here FREE.

(1) Housing Investors Settle Into a Holding Pattern