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PM to Hondo & DoucheDaDice. The Seattle Economy "Bubble"...
d2d
Member Posts: 3,109
Obviously you two don't read the front page of the Seattle Times. I've been watching all the real estate development in Seattle and saying to myself, "somehow this is all federal government bullshit." I would like to thank the Seattle Times for doing my homework for me.
Money from investor visas floods U.S., but doesn’t reach targeted poor areas. Wealthy foreigners seeking the federal EB-5 investor visa have fueled more than $2 billion in local real estate projects. How does downtown Seattle, the job center of the nation’s fastest-growing big city, become "Detroit" on paper? Seattle Times Front Page, today..
The only thing that's missing is Barney Frank's husband heading up the program. Can you say BUBBLE?
Add this to the Fed printing money for the past 6 years and all I can say is...
tick... tick... tick...
seattletimes.com/business/real-estate/money-from-investor-visas-floods-us-doesnt-reach-poor-areas-meant-to-benefit/
Money from investor visas floods U.S., but doesn’t reach targeted poor areas. Wealthy foreigners seeking the federal EB-5 investor visa have fueled more than $2 billion in local real estate projects. How does downtown Seattle, the job center of the nation’s fastest-growing big city, become "Detroit" on paper? Seattle Times Front Page, today..
The only thing that's missing is Barney Frank's husband heading up the program. Can you say BUBBLE?
Add this to the Fed printing money for the past 6 years and all I can say is...
tick... tick... tick...
seattletimes.com/business/real-estate/money-from-investor-visas-floods-us-doesnt-reach-poor-areas-meant-to-benefit/
Comments
"Everybody knows that real estate never goes down in value." Dan Rostenkowski
"Everybody knows that [residential] real estate never goes down in value." Race, circa 2006
It's really simple:
"Loophole" was created in the Federal Government through a program that to the public looks great because of job creation but instead is really just a way to get rich international people that want a green card to have financial ties into creating long-term investments.
The State is doing a great job in making sure that they are ensuring enough loopholes in place to make an attractive marketplace for this investment to take place while staying within the rules. No reason to hate on the State for making sure investments take place here.
And if you know anything about rich people, you would know that the tie-in through the green card is what they are looking for first and the profits are secondary. These fuckers are so rich that the investment that they are putting up for these projects is pocket change for them. Plus, when you realize that most of these projects are going to turn into stable returns for them that are creating cash flow instead of being a drain on it, then everything is good. And the reality is that as long as Seattle remains a business hub, which from a technology standpoint there's no reason to believe that that's going to change anytime in the near future, then corporate real estate is as good of an investment as you can find for these investors.
Until then, 420blazeitfaggots!!1!
Even funnier is you upvote tequila's tldr response, then say the exact opposite of what he just said.
BTW, on a cash basis, they are not safe. But if the individual is in a high enough tax bracket, after they deduct the leveraged depreciation and the investment interest against ordinary income, then converts their tax basis to long term capital gain, worst case scenario (foreclosure), they do a little better than break even. If the property just maintains its value and the mortgage gets amortized, it's all long term capital gain profit.
If the owner dies, the investor (heir) takes a Section 754 election and receives a step up in tax basis to fair market value upon death and even avoids the long term capital gain tax.
But you should listen to Hondo.
I don't disagree with anything that you are saying. What I was speaking towards was my experience working with projects that have a real estate component (which is far less in both magnitude and scope as yours).
Generally speaking, most situations that I've been involved with aren't started unless they already have a commitment in place that provides a stable contractual form of cash flow for a fairly significant period of time - which obviously counteracts any interest bearing activity that they have tied up into the mortgage. The rates at which they lease are often going to require a return (I typically saw in the 10-20% range).
What I was speaking more directly towards though was the expectation that those that would be building in Seattle would not only be in a position where they are locking in the cash flow prior to building (i.e. already secured a corporate partner that has entered into a relatively long-term lease agreement), but given the outlook for business in the area (number of companies + growth currently outpacing current availability for space available), and given the fact that Seattle real estate is some of the most desired in the country, the overall risk to such a project would be relatively low in the grand scheme of things for these types of projects.
However, should a project turn into a negative investment, not only does the green card cover some of the short-term pain, but the losses off all of this basically just offset other gains so the impact tax wise isn't as bad - which also equals cash gains.
IF this situation was viewed in any way, shape, or form as a highly risky business for those involved, you wouldn't be seeing so many eagerly trying to get involved in the process. For many, the green card alone is worth it. But when you combine green card with making money in the process, you get abundance.
Then the people buying their green card are out their $500k. They are using this method because clearly they don't have the million dollars for the standard investment. I highly doubt they would sign off on a shitty investment. I didn't look at the strings, but I'd imagine there is a 5 year holding period, so they'll sell in 5 years to the main investor.
But you are all knowing and don't think that $2 billion of private capital investment into Seattle is a good thing. Who gives a shit if a couple million of that investment is people buying their green card.
They wouldn't do the investment if getting the green card kicked them in the shorts afterwards.
Whatever risk exposure is out there, it's not enough to hurt them in the shorts.