Where to Invest Now: The Year Started off with the Economy Sending Mixed Signals, So What Can You Expect for the Rest of 2007?

By Taylor, Chris | Black Enterprise, April 2007 | Go to article overview

Where to Invest Now: The Year Started off with the Economy Sending Mixed Signals, So What Can You Expect for the Rest of 2007?


Taylor, Chris, Black Enterprise


MAJUANA MARTIN ISN'T A NOVICE when it comes to real estate. Ask her about the condo she bought for her daughter Breana, a senior at Hampton University, and she can rattle off a detailed description, complete with square footage. Sporting a price tag of $85.000 in 2005. the 1,300-square-foot, two-bedroom condo in Hampton. Virginia, is now worth an estimated $175,000. "That's going to be [Breana's] nest egg," says Martin. "My goal is to teach her about finance." And it appears that her interest may be rubbing off: Breana, 22, sits on the board of her condo association.

Martin, who works as an IT consultant for AT&T, has made a substantial investment in real estate and estimates her total equity to be valued at $320.000. In addition to her daughter's condo, the 51-year-old divorced mom owns her home in Oakland, California. and last year purchased an investment property that can provide two sources of income: A three-bedroom house and a one-bedroom cottage sit on the lot, Martin says she clears about $700 a month from her investment.

But these are uncertain times for many homeowners, as forecasts of declining housing prices abound, "While the [local market] has slowed, houses are still selling," says Martin, showing little sign of anxiety. Her outlook is bolstered by her diversified holdings and the $220.000 she has in her investment accounts.

So what do the experts say about what's in store for the rest of the year. and how can those market trends work for you? BLACK ENTERPRISE sought advice from top money managers about real estate, stocks, and bonds. From interest rates and initial public offerings to foreign stocks and the depreciating dollar, here's what they had to say. Take notes and ms p out how to make 2007 your breakthrough financial year.

REAL ESTATE: FINALLY A GOOD THE FOR BARGAIN-HUNTERS

if there was any doubt that the epic real estate boom has drawn to a close, consider that doubt dead and buried. Sales of new homes fell by 17.3% in 2006, the sharpest decline in 16 years: and inventory is piling up as the number of canceled contracts spikes and homes sit on the market for longer periods of time.

It was bound to happen. But a real estate slowdown doesn't have to be a negative thing. It can be an ideal time for savvy investors to go bargain hunting suggests Bernard Beal, CEO of financial services firm M.R. Beal & Co. in New York. The increased housing supply means that the creaky residential market could stay that way for the rest of the year. As speculators leave the market and real estate goes out of favor, Bed thinks it might be time to swoop back in. "Because of the market's softness it might be an opportune time to buy," he says. "But it's certainly not the best time to sell."

Real estate isn't defined by just the residential market, though. While a home is the greatest investment for most American families, real estate investment trusts, or REITs, continue to gain in popularity. These investment vehicles allow an investor to tap into commercial real estate, such as apartment buildings, hotels, or shopping malls, without acquiring the typical headaches involved in being a landlord. And they've enjoyed a truly spectacular run--the U.S. REIT index has produced returns of more than 30% for three of the past four years.

But will these glory days continue? "Trees don't grow to the sky," concedes Quintin Primo, chairman and CEO of the real estate investment management firm Capri Capital Partners in Chicago. Though the next five years will likely see the REIT sector cool off, the next 12 to 18 months should continue to see that level of performance, he predicts. That's because macro factors-such as private equity firms snapping up REITs and investors stocking up on real estate to diversify their holdings beyond stocks and bonds--show no sign of abating. And don't forget the powerful lure of the dividend: By law REITs are required to distribute 90% of their income to shareholders. …

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