We’ve heard some chatter in the news about regulations restricting travel.
Apparently, China’s restriction on the movement of capital is affecting global real estate markets.
But don’t just take our word for it. Check out this January 26 Bloomberg headline …
China’s Army of Global Homebuyers is Suddenly Short on Cash
“China’s escalating crackdown on capital outflows is sending shudders through property markets around the world.”
This highlights a point we’ve been making for quite some time … China’s growing global financial influence has Main Street ramifications.
Consider this Bloomberg article from late last year …
World’s Biggest Real Estate Frenzy Is Coming to a City Near You
“Welcome to ground zero for the world’s largest cross-border residential property boom. Motivated by a weakening yuan, surging domestic housing costs and the desire to secure offshore footholds, Chinese citizens are snapping up overseas homes at an accelerating pace.”
“In the U.S., they’re increasingly searching for properties in Houston, Orlando and Seattle, which displaced San Francisco in the first quarter as the third-most viewed U.S. market on Juwai.com, a Chinese search engine for offshore real estate.”
Now let’s put the two articles together and marry them to some other thoughts and observations.
First, these are just reports. They’re the START of your investigation, not the conclusion.
The facts you uncover aren’t by themselves “good” or “bad.” They’re just information.
What the information means to YOU depends a lot on how you’re approaching your investing.
If you’re flipping in Houston or Orlando, you might be riding a hot market wave driven by Chinese demand … whether you know it or not.
But if the Chinese demand is receding, you could get caught. That would be bad.
So perhaps you’d want to reduce your exposure … and only flip houses you could afford to hold until the market got hot again.
On the other hand, if you’re a long-term income investor, you might think it’s GREAT that the flow of Chinese money is slowing.
Lower prices make it easier to get a deal that cash flows.
The point is that the facts are neutral. What matters is how YOU interpret and respond.
There is no one size fits all answer … and that’s GOOD. Otherwise, there’d be a lot less opportunity.
Of course, you can only respond to the facts you see.
So if you’re not paying attention to the linkages, you might not think Chinese financial policy has any affect on your real estate investing half a world away.
But these articles indicate it does.
We’ve been talking about China for a while now. And now, there’s a whole NEW dynamic to consider …
Like him or not, President Trump is stirring several pots pretty aggressively. China may be on Trump’s list.
After he was elected, but before he was inaugurated, Trump vowed to name China a currency manipulator. But so far, he hasn’t done it.
China is an economic force on many levels. Just as the rest of the world has needed to watch the United States (and still does) … for the last few years, the United States has needed to watch China.
And now, the United States needs to watch China watch the United States!
How will the dance between the two largest economies play out on Main Street?
The rise of China has made investing more interesting, exciting, and complicated.
The rise of Donald Trump has turbo-charged all of that.
Here’s the GREAT NEWS…
Compared to stocks, bonds and commodities, real estate is SUPER simple and boring.
That’s good for us because we aren’t that bright.
But compared to real estate investing 30 years ago, it’s more complicated.
So again, how it feels to YOU depends on what you invest in and how long you’ve been investing.
We think stock, bond and commodity investors will increasingly discover real estate in their search for yield, stability, wealth preservation, privacy, asset protection, and simplicity.
That’s because real estate is arguably one of the best safe haven investments in volatile times.
But there’s a learning curve to be a real estate investor. You can’t just sit in your crib with an app and dial up investment properties.
Of course, this doesn’t mean you’re personally dealing with tenants and toilets.
Yuck.
However, it does entail learning a new investing language, and building new relationships with advisors and purveyors of opportunities. You’re joining a new club.
But even if you already know how to invest in real estate, you have a learning curve too. Because the world is rapidly changing due to geo-politics, demographics, technology and systemic weakness.
It’s wise for experienced real estate investors to develop a sense of macro-trends and how they translate to Main Street real estate investing.
It’s dangerous to keep your nose too close to the grindstone.
Of course, it’s no secret we see a big opportunity for experienced active real estate investors to partner with transitioning paper asset investors through syndications.
Whether the money is fleeing China or a bubbly U.S. stock market, investors are looking for better places to store and grow their wealth.
Those movements will create challenges and opportunities depending on how you position yourself.
The key is to pay attention, seek out wise perspectives and new ideas, and to build a network of people who can help you take appropriate action.
We don’t know where the world will be in the coming months.
But we know on April 1st, we’ll be huddling up with our Investor Summit at Sea™ faculty and nearly 180 investors from all over the world.
We’ll be talking Trump, China, the U.S. dollar, gold, real estate markets and niches, and more.
You’re invited to join us. It’s always amazing.
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