I am retired and take educated guesses on all things financial.

May 03, 2007

May 4, 2007: Real estate on the cheap and Petroleum refiners: It's a gas.

I spent the forty-eight hours on two interesting real estate projects. I was coordinating a large restoration project on a multi-unit property which required three fire investigators, the media, insurance companies and acquiring temporary lodging for all the residents. Everything was accomplished and everybody was cooperative. I now have a large project beginning with a thirty day deadline imposed by me on the restoration coordinator. I will be providing all the subcontractors and fine tuning the thirty seven page insurance settlement to make sure everything is demolished, repaired and/or cleaned. The new roof goes on tomorrow.A complete roof.
After seven 40 yard dumpsters of fire damaged goods, the place is cleaned out and ready. More on this later, if it is worthwhile to write about.

The second project was a 6500 square foot circa 1922 brick store/apartment building with two full adjacent vacant, buildable lots purchased for $35,000.It needs a total rehab, but has outstanding potential. It looks as though the city is even going to ante up interest free repair monies and outright grants. When finished, the building may be worth $500,000. Beats trying to get an extra 10% return on an ETF.

I read so many financial blogs and every bean counter seems obsessed with only stocks or funds. What a huge mistake for the serious investor. And how one dimensional. Real estate is a wonderful place to be right now. Like every other investment, you had better know how to get out of an investment before purchasing it.

What's with gas prices?

Despite the increase in gas prices,consumer demand remains strong, up 1.7% last week vs. last year. Price is not enough to illicit a negative demand response from consumers; it is high price and a relatively long duration that will do so. One analyst predicts that stagnation rather than a fall in demand is the most likely scenario over the next two months. As refineries return to operation from maintenance, import levels return in spite of a greater gas need for the EU (so much for global warming curbs), the markets should rebalance and by early June gas prices will begin to moderate.

To cash in on BIG OIL (sic), here are a few companies to consider longer term:

Royal Dutch Shell (RDS)
Hess (HES)
Statoil (STA)
Alon USA (ALJ)
Tesoro (TSO)
Valero (VLO)

and in Europe,
Helenic Petroleum (HEPr.AT)

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