Property Values and where to invest now? - Posted by Peter

import · June 6, 2004, 8:05pm

Posted by Jeremy on June 12, 2004 at 01:10:49:

I am looking at a variety of places to invest. Locally, the appreciation has taken most properties out of reach of cash flowing. But in other areas not too far away, the properties do cash flow, but does this mean that they are depressed? When will I know when to strike? I figured with low interest rates lately, the real estate market in general is at a peak. Is this a gross generalization that I make, or are ares really suseptable to local conditions more than I think?

import · June 6, 2004, 8:05pm

Posted by Peter on June 06, 2004 at 20:05:56:

Everyday on mainstream sites and periodicals we see talk about real estate, where its going, the next hot market, why california cannot sustain anywhere near the growth it has seen.

Now, for most of us, we are limited to our backyard, and lets say you are in a flat market, you are not able to take part in what cali has seen. Even people buying somewhat modest price homes 4 years ago at 250k 300k are close to millionaires in some parts of cali due to appreciation.

I realize you make money when you buy, etc, favorable terms, but you will never come close to those returns to flat or average markets. In hot markets, people who have no idea what they are doing in real estate are making a killing while us in average markets work hard to get deals.

This being said, is it worth the extra risk to buy in other “hot” markets or markets you see coming up, as opposed to buying in your hometown for example rural arkansas? Owning property 1000 miles away and hoping to take part in the massive appreciation.

To me, the risk makes sense, you diversify markets, you may not be there, but get a good prop manager you can trust, you may not cash flow much or maybe not at all, but a 17% annual appreciation will blow away that 3% in a few years if you sold.

I would like some thoughts on this and if you have ideas for markets that will outperform the average.

THanks!

import · October 26, 2005, 5:31pm

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import · June 8, 2004, 9:34pm

Re: Property Values and where to invest now? - Posted by Dave T

Posted by Dave T on June 08, 2004 at 21:34:03:

Sounds like you have a case of “The grass is always greener somewhere else” syndrome.

You may have to adjust you investment strategy for your market. In hot markets be a seller, in down/depressed markets be a buyer, and in flat/stagnent markets be a landlord with what you are holding.

I have used down markets to acquire rental property which I hold for the hot market times. In one area of the country where I am invested, the flat market lasted from 1982 to late 2003. I slowly accumulated distressed properties (foreclosures mostly) and rehabbed them for rental use. Yes, the market did appreciate slowly - 3% to 4% annually – just to keep pace with inflation. Today, I am seeing 50% appreciation rates in just the last six months alone. The property I bought for $49K in 1999 was put on the market four days ago for $152500. Tonight I got a call from my agent who received an offer for $153500 (I guess this buyer really wants my property to offer more than my asking price).

I am going to do a 1031 exchange and already have my replacement property under contract.

import · June 7, 2004, 11:35am

Re: Property Values and where to invest now? - Posted by Mike

Posted by Mike on June 07, 2004 at 11:35:50:

I invest in Florida and I live on the west coast. I wouldn’t invest any other way. Why invest in a mediocre market when you can make money in some of the hottest markets in the country? You just have to make sure you know your markets as well if not better than those who live there. It comes down to research research research. I also pursued partnering up with someone in Florida to work with as well and it’s been a great experience. If you want to learn about which areas are hottest I suggest you check out the latest OFHEO report on housing appreciation in metro areas around the country, www.ofheo.gov