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Trump was right to say the 2008 real estate crash would be a good thing for real estat investors

Posted by John Reed on

Hillary made a commercial depicting Trump as a monster because he said he wanted the 2008 real estate crash because it would be an opportunity to make money.

He did not and could not cause the crash or even contribute to it. The people who did were mainly the government and prominent among them was Bill Clinton.

There is a reason economic crashes happen. And there is a reason recoveries happen. Investors like Trump are the reason recoveries happen. They swoop in and make bargain purchases and typically have to improve the physical structures and/or the management of the businesses in question, and they do, with their own money or money they borrow.

Markets tend to overreact in both directions. Fed Chair Greenspan famously called the upside overreaction “irrational exuberance.” Following his lead I call the downside overreaction “irrational despair.” My book on Football Clock Management has a parallel pair of stupid reactions to a football play: “premature celebration” and “premature mourning” and numerous case histories where those bad reactions cast the team in question a game.

Real estate prices were too high in 2007. Investors who know what they are doing cannot buy in such markets. They can and do sell. The real estate market that year and in the years leading up to it was overheated, overinflated, a bubble. Such markets are unhealthy, the calm before the storm.

Then when the crash comes, like the bubble before it, it goes too far. At that point, there are bargains to be had. That is what Trump was talking about. It’s counterintuitive. That’s why he said it. Like good journalist, he saw a man-bites-dog story and told it to draw attention to himself.

I have been a professional real estate investment writer since 1976. Maybe 25% to 33% of my writing is about finding bargains, many of them stemming from general economic downturns like the 2008 crash in real estate.

When there was a ridiculous crash in real estate in the oil patch during the 1980s oil glut, I told readers these prices are ridiculously low. Go buy in Alaska and Oklahoma. Two who did told me how much they made. One was a guy who just got a divorce. He had a big lump sum from the divorce, read my article, went to Alaska, bought the kind of properties I told him about, and made a million or two in short order.

Here are my book titles that relate to what Trump was talking about:

Distressed Real Estate Times
How to Buy Real Estate for at Least 20% Below Market Value, volumes 1 and 2
Deals that Make Sense
Real Estate Investment Strategy volumes 1, 2, and 3
How to Protect Your Life Savings from Hyperinflation & Depression…/john-t-reed-s-book-on-hyperinfla…

Also you can see the topic again and again in my list of back article titles of my newsletter Real Estate Investors Monthly.…/article-list-john-t-reeds-real-estat……/john-t-reed-s-real-estate-invest…

Hillary was just showing her ignorance of real estate investment with that ad, and/or her contempt for the intelligence and knowledge of the voters. Buying when prices have fallen too far is a substantial part of the field of real estate investment. Trump’s first deal—turning the bankrupt but well-located (next to Grand Central Station) Commodore Hotel into the Grand Hyatt in Manhattan—was a perfect example of that approach.

You would think a liberal like Hillary would recognize turning a decrepit, bankrupt old hotel into the gleaming, prospering Grand Hyatt was a good thing. Liberals do think that, as long as no one makes a profit in the process. It’s only okay in their eyes if it’s done by a government program where they cut the ribbon and all the employees are union. Unfortunately, government efforts of that nature almost always fail like the Wollman Ice Skating Rink in Central Park which Trump fixed after government failed for 7 years.

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