Fighting the Herd

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Created on Wednesday, 31 October 2012 15:47

Published on Wednesday, 31 October 2012 15:47

Written by Andrew Snyder, Editorial Director, Inside Investing Daily

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the idea of investing in real estate makes conventional investors quiver. But some of the smartest moneymakers on the planet are buying everything they can find.

One of the greatest investments of the last 60 months was also one of the scariest. The asset investors feared the most turned out to be one of the most lucrative plays in decades.

It's proof that a spooked herd is an easy target.

Let me tell you about George Comfort & Sons Inc. The folks behind this small, relatively obscure investment firm know a thing or two about taking advantage of spooked investors. Their game is real estate. And in 2009, they made a move that most folks thought was crazy.

At the peak of the panic, when all anybody could speak of was meltdown, the group spit in the face of fear. It cut a check for $600 million and bought itself a building on New York's Eighth Avenue, known as One Worldwide Plaza.

Deutsche Bank owned the building at the time, because the former owner -- which paid a whopping $1.74 billion for the high rise just two years earlier -- could no longer pay its debt. But despite the horrific prognosis in 2009, George Comfort knew it was on the receiving end of a fantastic deal.

After owning the building for just 36 months, the investment firm recently decided it was time to rake in the profits. It put the copper-roofed office building on the market... for sale to the highest bidder. At deadline, the final offer has not been announced, but sources tell us the bids are "well over" the billion-dollar mark.

If the pre-sale estimates hold true, George Comfort stands to make more than $1 billion on the deal. And it all happened in what was supposed to be "the worst real estate market in generations."

Not only did the group turn every dollar it invested into two dollars... it collected hefty income while it did so. As one of Manhattan's largest office buildings, One Worldwide Plaza offers over 1.5 million square feet of rentable office space. It's that kind of reliable cash flow that turns normal investments into wealth machines.

I say there are just two reasons George Comfort was able to make such a lucrative deal. The first is simple. The firm had the fiscal guts to lean into a headwind and buy when everyone else was selling. When the herd ran one direction, the investors behind this company ran in the other direction.

The second reason is equally important... the group had the cash to make a move. The importance of having the ability to buy when the opportunity arises cannot be overstated. It's what makes guys like Warren Buffett legends in the investing world.

America's Great Recession was Buffett's moment in the sun. His liquid wealth gave him the ability to make one sweetheart deal after another -- from high-interest deals with Harley-Davidson to bailouts for Goldman Sachs that led to billion-dollar profits. The Oracle of Omaha was a loan-making machine as the traditional economic system imploded in 2009.

As we put our toes across the fiscal cliff over the next few weeks, I am convinced we will see similar opportunities. We will see panic. We'll see market hyperbole. And we'll watch as market indexes dip.

But smart investors will run against the herd. They'll buy what others are selling.

In the next issue of Unconventional Wealth, I break apart an investment scheme that falls right in line with the strategy George Comfort used to double its money. But the opportunity I've got my thumb on is even more intriguing.

It allows us to collect a paycheck directly from Washington. I'm going to show readers how to invest directly in real estate... and become Uncle Sam's landlord.

As the bond market overheats, I am convinced rental real estate will become the ultimate source of wealth for income-focused investors. And there's no better renter than Uncle Sam. He may throw some lavish parties, but his checks never bounce... at least, not yet.

P.S. It allows us to collect a paycheck directly from Washington. I'm going to show readers how to invest directly in real estate… and become Uncle Sam’s landlord. (If you want to see this stunning real estate opportunity for yourself, you can join Unconventional Wealth right here. )