What's dirt cheap right now?

[Ghost of Cutten]

Let's have some candidates for things that are very cheap? Classic value investing stuff.

There's been a huge real estate bust in the USA, and one kinda ongoing in Europe - could be an interesting place to look. Detroit, Miami, and Las Vegas have really been crushed.

My personal pick is Japanese stocks. They are 19 years into a secular bear market, since the all-time high. Lots of very cheap stocks around, with low debt, high cash balances. Price to book is pretty low. The main problem is moribund management. But that was like the US in the late 70s early 80s. I have no idea if Japan made its lows in late 2008 and will now have a mega boom for 10-20 years. But I do think that purchasing sound japanese stocks at good prices today will be well rewarded over the typical investment time horizon.

Another one I've been mentioning for a few years now is German real estate, I still think it's cheap, and you get nice rental yields while you wait.

 

[scriabinop23]

I think Japan is on the verge of a currency crisis...

US dollar denominated nikkei futures would be the way to approach it.

 

[Thermactor]

Dirt cheap = property in depressed cities like Dayton OH and Detroit Michigan. In Dayton there are homes in pretty good shape being sold for $3-10k. The kicker is that you have to pay very high tax rates on the value of comparable homes - so you pay $1,500 a year on that $3,000 property, which makes it a whole lot less attractive.

 

[scriabinop23]

Quote from Thermactor:

Dirt cheap = property in depressed cities like Dayton OH and Detroit Michigan. In Dayton there are homes in pretty good shape being sold for $3-10k. The kicker is that you have to pay very high tax rates on the value of comparable homes - so you pay $1,500 a year on that $3,000 property, which makes it a whole lot less attractive.

A lot of those properties have back tax liens and fines that make these properties appear not so reasonable. Those numbers have to be added back into the purchase price.

 

[Thermactor]

Quote from scriabinop23:

A lot of those properties have back tax liens and fines that make these properties appear not so reasonable. Those numbers have to be added back into the purchase price.

I know what you mean, but the ones I'm referencing do not have the back taxes or utility company liens that you mentioned. How's San Diego's condo market going, is it possible to find something under $100k?

 

[Pension_Admin]

Financial sectors.

I think as the economy picks up, financial sectors are going to benefit from it a lot.

I believe banks will most likely go back to the way they were before, and that is engaging in risky transactions to generate "value" for their shareholders (and for CEO's to earn their bonus). Banks will start "upgrading" each other in their ratings and will slowly gain investors' confidence as share price increase.

 

[scriabinop23]

Quote from Thermactor:

I know what you mean, but the ones I'm referencing do not have the back taxes or utility company liens that you mentioned. How's San Diego's condo market going, is it possible to find something under $100k?

Sounds good. got any links?

sdlookup.com has a decent database ... under 100k is tough. You might be able to find something in 92069 (San Marcos) - look at the mission park condos (conversions). http://www.sdlookup.com/Real_Estate-San_Marcos-Homes_For_Sale-92069 These rent for about $1100-1200/mo.

There's also a sweet spot in conversion-land in Rancho Bernardo (much better location w/ better schools) --- $130-$150k for 2 bed condos in waterbridge. You must bid on the 2 bath models if you want 2 parking spots ... compromises abound. Rents are about $1200-1300, but I think more upside than in San Marcos.

http://www.sdlookup.com/Real_Estate-Rancho_Bernardo-Homes_For_Sale-92127

Closer in to san diego and it becomes tougher. Parts of national city, north park, etc and you can get in a small crappy place for that much. The lowest prices are generally to be found in condo conversions that are prime territory for subprime liquidation (since all their owners were 2004-2007 vintage), and VA/FHA financing isn't often available since owner occupancy is too low. But for a long term investment or cheap place to live, not bad.

 

[peilthetraveler]

Farm land in argentina is dirt cheap. I saw about 1,000 acres for sale for $200k recently.

 

[psytrade]

volatility is cheap if you assume things will get worse.. again

 

[nutmeg]

Quote from Pension_Admin:

Financial sectors.

I think as the economy picks up, financial sectors are going to benefit from it a lot.

I believe banks will most likely go back to the way they were before, and that is engaging in risky transactions to generate "value" for their shareholders (and for CEO's to earn their bonus). Banks will start "upgrading" each other in their ratings and will slowly gain investors' confidence as share price increase.

I'm going to have to second that. Once they get back in the business of doing business. Imo though, not as a fundamental play more as momentum play. They are still in the damage control mode.