Investors and Colleagues,

As spring arrives and the end of the school season is in sight, the housing market is starting to come out of hibernation.

Spring is traditionally an active time for residential housing. Families with children prefer to move during summer break. That way they don’t have to disrupt the school year. But of course this often means signing contracts a month or two in advance. That is exactly what we are seeing this year.

Consider the news this week from the Associated Press:

“More Americans signed contracts to buy homes in March, but sales were uneven across the country…”

The National Association of Realtors reported 5.1% growth in sales agreements last month – and the number of signed contracts has risen 24% from the low point last June. At this point, the numbers are signaling a clear recovery in the US housing market.

But along with the good news comes some qualifying fine print. You see, the recovery isn’t an “even” recovery affecting all areas of the market. There are significant differences when you break out the numbers by price, location, income demographics and so forth.

As I’ve mentioned before, the residential real estate market is a completely different environment than we had just three years ago. From the late nineties, through about 2006, it really didn’t matter what kind of real estate you bought …

• Acreage outside metro cities? Prices went up.
• Urban condominiums? Prices went up.
• Single family homes in small-town USA? You guessed it, Prices went up.

Even investments in run-down neighborhoods with crime problems often paid off. With a call to a politician and a little luck, community transformation projects made even the most dilapidated properties a successful investment.

Today’s Market is Fragmented and Requires Expertise
In 2011, the real estate investment market requires a lot more experience. While the overall environment is certainly improving, the market is more fragmented than ever before. To a large extent this reflects the fact that our economic recovery is extremely fragmented.

If you look at unemployment rates, they are currently much higher for lower wage earners than they are for higher-paying employees. If you have little experience or a low level of education, employment challenges are much more difficult to overcome.

Inflation is another issue that hits lower income tiers harder. Food and energy costs make up a much larger portion of income for lower-tier earners. So when you see gas prices crossing over $4.00 per gallon and grocery bills increasing, know that this is hitting certain families much harder than others.

Translating this to the housing market, we are seeing uneven recovery because some portions of our economy are faring much better than others. Today’s opportunity is skewed much more strongly to the markets for affluent homeowners – and those who are able to find new employment opportunities.

In the Atlanta market, there are key real estate areas that will benefit from these dynamics. There are also some areas that may look attractive right now, but are actually very dangerous investments.

I call these danger areas “value traps.” On the surface, an investment might look like a tremendous value. But because of the difficulty in some portions of the economy, these investments may take an extremely long time to pay off. The problem with this is that your capital gets locked into a stagnant investment, and you miss the opportunity for much better returns on stronger investments.

Experience Drives Success
Many years ago, I made Atlanta my home and began developing my professional expertise right here. While many companies boast of their national presence and extremely broad asset base, Ashford Capital has chosen to take a different route.

Our experience is in the Atlanta market and there are few (if any) who can offer the type of expertise that we have built. When it comes to profiting from today’s real estate opportunities, Ashford Capital offers specific niche investments that have been hand-selected for your success.

Would you take a moment out of your day to discuss these opportunities with me? I would love to see how we can work together to meet (and exceed) your investment goals. Please call me today and we can begin the process.

Wishing you every success,
Matt

Investors and Colleagues,

Spring has sprung, and that means plenty of activity at the Ashford Capital headquarters.

Over the past few weeks I have been extremely busy working on both the acquisition side of our business (negotiating the purchase of distressed properties at incredible valuations), as well as on the sale side (completion of individual investment programs by selling to builders).

While the US as a whole may be experiencing continued challenges in the residential real estate market, we are seeing tremendous opportunities on both sides of the investment process – and our investors are booking profits along the way.

National Home Sales Slide, but Niche Markets are Strong

You may have seen the recent headline: US New Home Sales Tumble 16.9%…

On a national scale, the environment for new homes is certainly challenging. My last letter to you outlined how this environment is offering us some tremendous opportunities to pick up properties from distressed banks who have had to foreclose on residential developments. Banks operating on a national level are desperately trying to unload this inventory – at nearly ANY reasonable price – just to keep their capital ratios in line and beef up their balance sheets.

Since banks have little choice but to sell the most liquid of these foreclosed assets, Ashford Capital is able to negotiate to purchase the very best properties, while we bypass the lower quality pieces that don’t measure up to our high standards.

This month, I’ve been negotiating with Bank of America to purchase a particular set of high quality lots. The property is in high demand (I am already in discussions with a potential buyer), and Bank of America needs to move the property quickly. These are exactly the kind of opportunities that we like to capture in today’s distressed market.

Cashing In and Moving On

The national banks may be desperate to get rid of foreclosed properties, but on the other end of the spectrum, builders are desperate to see their business pick back up.

Think about it for a second. If you’re a builder in today’s environment, how are you going to stay in business? The only way that many of these companies are going to make it is to build the very best homes in the most attractive neighborhoods. And this is where our planning comes into play.

Over the last two years, we have been active buyers in these attractive neighborhoods. Increasingly, if you are a builder and want to roll out a new development, Ashford Capital is the company you need to negotiate with!

This is great news for our investors, because when we sell a property, our investors are able to cash in on their purchase. Not only do our investors realize a guaranteed preferred rate of return on their principal, but they also participate in the profit of the deal. So when a builder comes into my office and signs the purchase papers for one of our developments, we ring the register for each of our investors in that particular deal.

At this point, I have a buyer at the table who is very interested in three of our existing properties (neighborhoods you have heard me talk about several times in the past). I’m looking forward to sending a congratulatory email to each of our investors participating in these deals, once we finalize the transaction.

Don’t Miss Out on the Next Success Story

If you’ve been sitting on the fence, wondering when you should take action in today’s real estate market, it’s time to step into action.

As excited as I am about the properties that we are selling and cashing in on, I’m also slightly disappointed. I have several friends and colleagues who were interested in these properties when we originally bought them, but for some reason or another they did not pull the trigger. As we approach the period in which they would have been cashing in on a tremendous investment, I’m disappointed that they are not on board.

Don’t let this situation happen to you. The opportunities that we see today won’t be around forever. Banks will not always be desperate to unload inventory, and the FDIC will not always hold a portfolio of distressed real estate assets.

Now is the time, and today is your opportunity. Give me a call right away so that we can discuss how Ashford Capital can help YOU take advantage of the unprecedented opportunities. I look forward to hearing from you very soon.

Wishing you every success,
Matt

My friends, we live in interesting times…

As the broad economy emerges from what has turned out to be the most significant global financial challenge in a generation, opportunities emerge even while significant difficulties remain.

Government statistics show that the US economy continued to grow in the fourth quarter, although the growth rate was not strong enough to have a significant effect on employment statistics.

At the same time, inflation concerns are heating up both domestically and abroad. Food prices have been soaring due to emerging market demand coupled with supply issues linked to floods in some parts of the world and droughts in other parts. Political issues in Egypt are now raising fears of increasing energy prices – which means inflation is beginning to impact a broader portion of all of our lives.

Meanwhile, the US Federal Reserve, along with their counterparts in Europe and Asia, are working hard to keep currency values low – with the hopes of keeping goods and services cheap and boosting demand from overseas. The currency issue is especially dangerous because as governments compete to devalue their currency, it has a direct effect on the purchasing power of our individual savings and investment capital.

One other interesting issue to note is that banks are still sitting on large amounts of “troubled assets” – primarily loans and risky securities that have declined in value and are not likely to recover. On February 7th, the Wall Street Journal published an article titled: Toxic Assets Still Lurking at Banks. Below is a quick quote that captures the essence of the problem.

…banks still hold plenty of the bad assets that once spooked investors: mortgage-backed securities, collateralized debt obligations and other risky instruments. Their potential impact concerns some accounting and banking observers…

It’s a bit disturbing to realize that these banks can continue to hold specific trouble assets on their books without writing down the value “as long as they believe the value will eventually rebound. So while most people believe that the problems in the banking system have been resolved, my inside contacts at the banks tell me that these institutions are desperate to unload these assets at almost any price.

Historic Opportunity (And it Won’t Last Forever)

For the last few quarters I have been telling you that we are at a historic crossroads when it comes to investment opportunity. The financial crisis that first hit real estate developers & builders quickly worked its way into the financial system.

This left banks with balance sheets full of foreclosed loans and repossessed development properties. Unfortunately, many of these banks are still in trouble or have already closed doors – transferring the distressed property to the FDIC.

Today as the economy begins to recover, we have the once-in-a-generation opportunity to buy residential land at crisis valuations – despite the fact that the overall economy has already begun emerging from the crisis.

As you probably know, real estate is one of the most effective investments to hedge against inflation. As the price of various assets and commodities increase, land values typically rise alongside. So when you see that higher tab for filling your car or checking out at the grocery, keep in mind that savvy investors are offsetting these costs by owning positions that trade higher with inflation.

With my expertise in the local Atlanta market, Ashford Capital investors are picking up exposure to prime property which should lead the recovery in terms of price appreciation and the speed in which we are able to turn deals around and sell them to hungry builders and developers.

If A Picture Tells a Thousand Words…

If you are looking for a quick overview on how Ashford Capital’s business model is structured, take a look at our most recent presentation. The video is only about 2 minutes, but offers a good summary of how our investments work, the rates of return investors can expect, and the opportunities we are seeing in the Atlanta area.

Simply click here to view.

Once you understand the basics, the next step is for us to have a conversation and determine exactly how Ashford Capital can help you personally. Our investment programs are flexible and can even be implemented using an IRA or other tax advantageous account.

I’m looking forward to our discussion and hope you will join me in pursuing the unique opportunities we have in today’s market.

Wishing you every success,

Matt

I’m sure you’ve heard the saying before: “There are only two things certain in this life: Death, and Taxes.

Not a very cheery way to start my letter, I know… Each spring we have the dubious tax of computing our earnings from the prior year, deducting applicable expenses, calculating AMT, HSA, IRA, and a few dozen other alphabet soup metrics – before writing that final check to Uncle Sam. Suffice it to say this is not my favorite time of year.

While I’m sure we are all thankful to live in this country of opportunity, and more than willing to shoulder our share of the costs – the current environment has me even more careful when computing my tax liability. The federal budget has more red ink than at any time in history, and with all of the stimulus and bailout projects underway – taxes have nowhere to go but up!

From a financial planning perspective, one of the most important issues in creating and sustaining personal wealth is to minimize and/or defer tax liabilities whenever possible. Of course, real estate investments can be some of the most tax efficient opportunities around because of the opportunity to defer taxes for years (if not decades!)

What many people unfortunately do NOT realize is that taxes can be deferred even if you decide to switch the physical properties that you are invested in. So even if you hold a piece of property that is not in a particularly strong growth location, you can still exit that position and put the capital in a better – higher growth opportunity that allows your wealth to compound more quickly.

Ashford Capital and YOUR 1031 Exchange

Under Section 1031 of the United States Internal Revenue Code, certain types of property exchanges can be made, and the investor is allowed to “defer recognition of capital gains or losses due upon sale.”

What this means in plain English is that you can sell a piece of property, and put the capital into another similar investment without having to pay costly capital gains tax. This is perfect for investors who are currently sitting on rental property or other real estate investments that are not performing well.

All too often, I speak with frustrated property owners who would love to participate in the attractive offerings we have at Ashford Capital, but they have their own capital tied up in another investment that just isn’t showing the kinds of returns they had expected.

Many of these investors don’t realize that they really DO have options. If the value of the existing property is expected to grow at an attractive rate, then it makes total sense to hang on to this investment until the market allows you to sell and realize substantial gains.

But if you’re not sure that your investment property will appreciate over the next year, why not sell the property now (even at a lower price) and put the capital to work in an Ashford deal that has been hand selected for an incredible return over the next 12 to 36 months.

Since a 1031 exchange would allow you to sell and reinvest the proceeds without incurring any tax penalties, why would you NOT take advantage of this opportunity to see your capital compound more quickly.

Flexibility On Both Sides of the Transaction

In case you are wondering, the 1031 exchange applies not only when you are moving capital into an Ashford Capital investment, but also when we realize our gains and sell the property in question.

Let’s say you take an interest in a development we buy from the FDIC at a fire-sale price, and over the next 12 months that investment grows by 40%. When Ashford Capital sells the location to a homebuilder, you have the option of rolling your earnings into another Ashford deal – or even placing that capital in a completely separate real estate transaction – without ever having to pay a dime in capital gains tax.

Try asking your broker what happens when you sell a stock and reinvest the proceeds in a different company… You won’t be too happy with the answer.

For each 1031 transaction, it’s important to have proper planning and make sure that all of the documentation is in order. This is a fairly simple process and one that most tax preparers are capable of handling with the assistance of a 1031 exchange counselor.

So let me propose a quick meeting. I’d like to take you and your accountant or tax lawyer out to lunch and discuss the opportunity for a 1031 exchange. If you currently have an investment property, we can probably help you get a better return for your money. If you don’t have an investment property – WHY NOT? Ashford Capital can help you participate in the most vibrant rebound opportunities in the Southeast.

For you investment professionals out there, the offer stands as well. Why not have lunch with me and we can discuss the best ways to help your clients maximize their wealth and achieve their goals.

Wishing you every success,

Matt