Mike Norman, anchor, HardAssetsInvestor.com (Norman): Welcome back everybody. This is Mike Norman, your host, and I’m here with the second half of my interview with Tom Adkins of Tom Adkins Homes.

Now Tom, in our last interview we went over pretty much your outlook on the market. Things have pulled quite a bit; you’re looking still now for an improvement. We need to see that confidence come back; hopefully it’s going to start. We’ve seen a nice recovery in the stock market since last March. We need to see net income growth, which, essentially, what you’re saying is we need to see the economy start growing again.

As an investor – now I know you do this professionally – you’re involved in the home building yourself. For an investor, for somebody who thinks as you do right now – that there could be a good opportunity given the price decline. Given the fact that we may be starting to stabilize – what are some ideas, ways to go about it?

Tom Adkins, president, Tom Adkins Homes (Adkins): If you’re going to be a real estate investor, you have a couple of options. The first one is actually physically buying real estate, buying a house.

Norman: Foreclosure?

Adkins: Sure; a thousand ways to do it. The other way, of course, is you can get involved in the stock market. If you’re afraid to be an industrial investor, and the reason why is because if you own a home … look any knucklehead can go out and buy a house; the hard part about making that house work is management. The advantage of going into the markets where they provide ETFs or whatever is you go into the market, somebody manages it for you. You sacrifice something, you have less control; the only control you have is to sell it, and, of course, if you bought it at 50 and it’s down to 30, you’re losing.

So that’s the downside of going through the market: You don’t have the control over it. You’re weighing these two things out, and for some people, they don’t want to get involved with calling the plumber or fixing the roof; it’s just a pain in the neck.

Norman: You don’t have to do that with a stock.

Adkins: Yeah.

Norman: What areas of the country … now, the ones that were hardest hit obviously were California, Miami, Las Vegas, Phoenix, these places. Are those the places you want to get back into?

Adkins: Not yet, no. I’ll tell you why. They were the first places to suffer, and there’s a huge inventory there. There are in some places they are thinking of, four, five years’ worth of inventory.

Norman: But aren't those places the real desirable places, don’t they have the demographics backing it up that’ll say, long term, that’s where the growth is going to stay?

Adkins: You need someone to rent that thing from you, unless you want to buy and let it sit there. You need someone to rent that thing to get some income coming in, and right now they’re just not there. There’s a market stabilization where there’s just about enough renters as there are houses available; that’s when you get back into the market in those places.

Now let me give you an example of a place to look at. I do a lot of investment in Texas; Texas is a spectacular state. You look for the following things: a state that has low taxes, a great growth environment, great business environment, and other factors that might increase its desirability. For instance, Washington, the Seattle area, is actually not that bad of a place to go; they have not been hit that hard. Why? Because imports are doing great; it’s still a place to buy. Also, when exports happen, all these exporting areas …

Norman: Exports have been doing great.

Adkins: Imports and exports, both. If you bring something in, it goes through Seattle, it goes through San Diego, and it goes through the ports of Houston. So you look at places where there’s a lot of commerce going in and out of the country, because regardless of what the country’s doing, whether imports are happening or exports are happening, either way, they’ve got to go through that port, and that’s where you want to do a lot of business.

So if you look at places like … anywhere there’s a decent port city, there’s typically a decent business environment, especially with Asia right now. So anything on the West Coast that has a decent business environment, I like it – take out California.