There and Back by Way of Scandinavia

“Problems are only opportunities in work clothes.” – Henry J. Kaiser

I returned from my business trip on Friday and… yes, I drank plenty of coffee. In Europe, even the in-flight coffee tastes better than anything you can order at home in the Tall, Grande, or Venti variety. Plus, at some point during the business day, they escort you down the hall to the espresso bar. I am in heaven.

I traveled to both Stockholm and Helsinki and the things that I read and heard were not only interesting but taught me something outside of my normal American-centric thinking. At dinner, my favorite non-work topic is quizzing local colleagues and customers on the housing market. I find this to be a universal topic that offers the same enthusiastic commentary if these questions were asked at a cocktail party in LA.

MoneyWeek recently reported that, “Never have so many people been so clever. From the Baltics to Botswana, Alaska to Auckland, more investors have increased their personal wealth at a faster rate than at any time in history. Soaring real estate prices are a fact in almost every major and most minor nations, irrespective of politics, economic growth, supply or demand. The extent of some gains is staggering.”

“New hot spots arise almost monthly; the most recent is the number of British investors in Bulgarian property. This has increased tenfold since 2003. In many villages throughout France and Spain, Brits, Germans and Scandinavians often account for over half of all home ownership.”

“Mr. and Mrs. Third Home-Buyer care… merely that the monthly bill for speculation has never been lower and each year saw impressively large returns; a background of weak stock markets also confirmed the wisdom of property, so the cycle has become self-perpetuating.”

Jim Myers at NewsMax.com quotes from an article last summer in the Economist. “The U.S. has experienced one of the largest increases in home prices over the past year, with the average cost of a home rising by 12.5 percent. Other countries have showed gains even higher than the U.S. in the last year, with prices rising by 23.6 percent in South Africa, 19 percent in Hong Kong and over 15 percent in Spain and France.”

The Sunday Times in Britain reports that, “Having made a tidy packet from property in the UK, Daniel Lee is broadening his horizons. The 30-year-old entrepreneur from Wilmslow, Cheshire, is buying a £180,000 flat in The Torch, a new tower block being built in Dubai.”

“I just fancied Dubai,” said Lee. “You get a lot for your money compared with the UK, the weather’s guaranteed, there’s potential for capital growth, and it’s a great position.”

Dubai? Hmmm… this sounds suspiciously similar to condo conversion speculation in Miami. There are key differences between real estate speculation and real estate investing. If real estate is part of your investment portfolio, then learn the guiding principle of positive cash flow. It's a lesson that will change your world.