Real Estate Investments That Make Sense

Our mission is to provide unbiased information and advice to residential real estate investors nationwide. Steve Setka, the owner and primary consultant at Nationwide, is available to provide you with information and insights that will position you to acquire income property investments with a high probability of yielding an exceptional return with a minimum amount of risk. Real estate investments are an essential componant to increasing level of wealth.

Our Philosophy

Steve and Kathy rely heavily on investment fundamentals when investing their own funds and advising their clients. The two bedrock principles that form the foundation of all decisions and advice we provide are the law of supply and demand and the concept of risk versus return. Everyone has heard of these aspects of prudent investing; however, many investors get distracted with other aspects of an investment decision and lose sight of the detrimental effect ignoring these principles can have on the outcome of their investment. Sometimes, sloppy investors happen to buy at the right time and make money; others jump into speculative markets and are able to make a quick buck. In most cases, these lucky people were unaware of the high level of risk they took and/or failed to consider the potential effects of supply and demand when they decided to move forward with their plans. We feel the best strategy is to continually pay attention to the fundamentals, which involves understanding current and projecting future relationships between supply and demand; evaluating what impact future economic and other factors may have on the proposed investment; and weighing whether the potential returns warrants taking the associated risks.

The value of any commodity is related to how much there is and how many people want it, the law of supply and demand. What would happen to gasoline prices if someone invented and manufactured a car that ran on another abundant and cheap fuel? What would happen to property values in a city that was completely built-out and the population increased sharply? These questions both illustrate the effect of supply and demand on prices. During the real estate boom a few years ago, many clients asked Steve’s opinion regarding investing in single family homes in the Las Vegas and Phoenix Areas. At that time, property values were skyrocketing and speculators were making a lot of money in those markets. Steve advised them not to invest because the increases were not sustainable because developers could keep building new homes (add supply) and the job and population growth (demand) was not going to keep up with or exceed the increasing supply of homes that would likely be built in the foreseeable future. To add to his concerns, a large percentage of the buyers during the boom were investors, which artificially and temporarily pumped-up demand. The law of supply and demand eventually caused the bubble to burst in these and other speculative markets; the speculators that got in late lost money.

The second bedrock principle involves understanding and evaluating the potential returns and the associated risks of a proposed investment. We believe that as the potential for higher returns increases there is always a proportional increase in risk. Superior planning, evaluation, strategies, and analysis can improve the relationship between probable returns and related risks (the concept of maximizing returns and minimizing risks); however, nothing will eliminate the risks for investments that have the potential to generate returns greater than the “safe rate of return”. The safe rate of return is what you can earn without taking any risk. Examples of these investments are a certificate of deposit at your local bank or the purchase of government security, like a savings bond. In order for you to lose your initial investment, the United States government would have to collapse; this is possible, but extremely unlikely. The problem with investing at the safe rate is that after taxes and inflation are considered, you are lucky if you receive a zero return on your investment dollars. In order to earn positive returns after taxes and inflation, you have to assume some level of risk; there is no way around it!

Every investor has a different tolerance for risk. Before recommending any investment, we first assist our clients in determining the returns they desire and level of risk they are willing to accept. Then we can help you sort through the investment options to determine what portion of your investment funds (if any) should be invested in real estate and discuss the various options and vehicles that you can utilize to invest.

Steve and Kathy believe that all investors should diversify their investment dollars. We would never recommend that you have all your funds invested in real estate related investments. The percentages we will suggest will vary from one investor to another depending on the portfolio size, rate of return desired, and tolerance for risk. If you decide that investing in real estate is right for you, we will provide information on the various ways you can invest and discuss the pros and cons and risk/return relationship of each; examples are individual direct investment, group investment with others, or buying shares of a large corporation or partnership with specific real estate holdings. We also offer our clients referrals to investment professionals that can provide you with advice on maximizing your returns and minimizing the risk on the non-real estate portion of your investment portfolio, such as stocks, bonds, and mutual funds. Additionally, these advisors can give you more information and professional advice relating to investments in shares of publicly traded real estate partnerships, trusts, or corporations.