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Today's Issue

Real Estate - Investing In REITS

The Dynamic Wealth Report
November 21, 2007

Can Money Still Be Made In Real Estate?


Just last night I was having dinner with my brother and sister-in-law
when a very interesting topic of conversation came up.  “Can money still
be made in real estate?”  It was a great question.  A question I am
sure many other people are asking themselves at this very moment.

The Phoenix metro area, where I live, was a hotbed of investor
speculation just a few years ago.  Newspapers and magazines were full of stories about people buying multiple homes at constantly higher prices, and flipping them for quick profits.  At one point it was estimated 25% of every new home being built was sold to an investor.

Now the real estate market is dead.  I have seen homes in my own
neighborhood sit on the market for more than 6 months, with limited interest from buyers.  I also know of several people who are carrying mortgages on two or even three properties and are desperate to unload them.

Other real estate statistics support these thoughts as well.  Foreclosures are at multi-year highs, prices are falling, inventory is rising, and permits for new home construction are reaching new lows.  Clearly the real estate market is suffering.  Just take a look at the Dow Jones REIT index which is down almost 25% from its high earlier this year.

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Now back to the question at hand, “Can we still make money in real
estate?”

I believe yes and here is why.  While buying and flipping houses may not be profitable anymore, there are a number of other ways to capitalize on what is going on.

Most people invest in real estate through the purchase of REITs.  REITS
are simply companies that own and manage real estate that provides dividend income and long-term capital gains to investors.  Recently the REIT market has fallen on hard times because of its ties to real estate.

Within the group of REITs that are publicly traded, there is a small
subset of companies that are focused exclusively in the healthcare space.  These REITs invest primarily in the real estate of hospitals, patient care centers, complexes for doctor offices and elder care facilities (they don't actually run or manage the facility).


Healthcare REITs are more closely tied to the state of the healthcare
industry than the real estate industry.  They have very stable operations
and a good long term outlook- yet have been rejected by the investing
community.  Here is a perfect example:

Senior Housing Property Trust (SNH) is down 23% from earlier this year.  This $1.7 billion REIT focuses exclusively on senor housing.  SNH's
more than 190 properties include age restricted apartments, independent
and assisted living properties as well as nursing homes.  Most of their occupancy rates are in the 80% to 90% range and revenues are growing.  Just two months ago the quarterly dividend was raised to $0.35, a 7% yield.

This is a good example of a company that has seen its stock price
decline for the wrong reasons.  Needless to say, you can make money in
real estate; you just have to know where to look!

On a personal note we at Hyperion wish you and yours a happy and safe Thanksgiving.  We'll be back with another issue on Friday.  

 Commodity Watch 

•   Corn (Above $3.75 a bushel)

The Thanksgiving feast this year has been impacted by higher turkey
prices.  Farmers are blaming the increased prices on higher feed costs,
specifically corn.  Most of the fingers are pointing at ethanol
producers.


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Issue Date:
 Wednesday, November 21, 2007


Notable Highs and Lows

•  Advanced Micro Devices (AMD) hit a new 52-week low of $10.52 today,
giving the semiconductor company a market cap of about $6 billion.

•  American International Group (AIG) hit a new 2 year low today on
concerns that they will report greater than expected write downs on their
mortgage holdings.

•  Citigroup (C) hit another new low of $30.50 reaching levels not seen
since early 2004.

•  Pepsico (PEP) hit a new all time high of over $75.50 this week.  The soft drink manufacturer now has a market capitalization in excess of $120 billion.


Quote of the Day

"Wall street is motivated by two emotions - Fear and Greed
                         -
Wall Street Saying

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Best Performing Sectors

Sector Gain
Oil & Gas Drilling 31%
Silver 20%
Gas Utilities 13%
Electric Utilities 13%
Accident & Health Insurance 13%
*Last 30 Days


Worst Performing Sectors

Sector Loss
Surety & Title Insurance 62%
Office Supplies 47%
Motel REITS 45%
Toy & Hobby Stores 41%
Residential Construction 41%
*Last 30 Days


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