Investment Considerations
Uncertainty is the greatest obstacle to investing in Real Estate. We don't know how the interplay of world politics, budget deficits, foreign wars, currency exchange rates, European debt and global climate change will impact US real estate values over an extended period. Nobody knows for sure and when it comes to investing, it’s human nature to delay decisions until one feels confident that markets are moving in a favorable direction. Although looking for trends may appeal to human nature, it may not be a good foundation for a prudent investment strategy.
The decision to invest in a particular property is generally mutli-year commitment. It doesn’t make sense to use a current market trend as the basis for multi-year investment when those trends can shift dramatically over the anticipated investment horizon. Stated another way, investment based on market-timing or market-momentum strategies may work in the short term, they may work fabulously during an extended market rise but those strategies are far less promising in unstable markets and can be simply disastrous in the face of a sudden downturn. There’s no doubt that, assuming the right environment, more speculative strategies can produce higher returns, even without good management. But history shows that no one can consistently guess correctly over the long term. Speculative errors are expensive.
In the real-world markets go through repeated cycles of rise and consolidation and it is best to position properties to perform through those cycles and realize equity appreciation over the longer term. Short-term opportunities will arise, and a good operations team will be prepared to exploit them. However, an investment strategy that is based upon hitting home runs will eventually fail. The greatest home run hitters frequently strike out. Rather than swing for the fences, it’s often better to get consistently on base.
Considerations
ROULER believes that a successful real estate investment strategy involves purchasing properties that (a) are well located, (b) have good leasing histories, (c) strong functional design, and (d) are attractive to a broad range of tenants. Buying such properties with a capital strategy that can withstand the highs and lows of the typical market cycle is a recipe for success. Naturally, this strategy is not complete without the support a professional management team that operates a tenant-oriented leasing and management program to create a positive reputation that creates competitive advantage and encourages lease renewals.
Rouleur seeks properties that provide either “everyday” or “hard to replace” services from either an “infill” or otherwise “strategic” location. We look to acquire “basic” buildings with good site plans and solid infrastructure that are more easily adapted to meet a wide range of tenant needs. Rouleur focuses on markets that are shown to be either more stable or have demonstrated good long-term growth potential. Finally, as real estate is a “local and personal” business, Rouleur targets geographic areas where its principals have either direct experience or strong industry networks to have a firsthand understanding of a prospective investment’s location and dynamics. Rouleur's principal markets are Texas and Southern California. We are interested in the Denver, New Orleans, Phoenix, and Las Vegas areas.
Patience is key. In the real estate business, you kiss a lot of frogs before finding your prince or princess. It is a long process: Investments that look good initially, won't pan out; promising properties will also be lost to undisciplined buyers. But by remaining active and patient, realizable opportunities will come.
