Posted by Ronald * Starr(in No CA) on March 12, 2002 at 21:13:42:
GL–(Ontario)-------------
Good Grief. What a coincidence. Thanks for the alert, I requested information on the properties.
Good Investing and Good PostingRon Starr******
property values SUCK!! what to do? - Posted by Dana_Ohio
Posted by Dana_Ohio on March 10, 2002 at 21:49:23:
Hi everyone!
i’m living in an area where property values are in the dirt- literally, and figuratively!
i recently looked at a house- the owner needed to sell- wanted 30k- and it needed 30k in repair- heres the kicker…
the after repaired value is…30k!!!
this is common here- most of the property values range from 30k-50k- the few outside this group are 150k and up.
no one is calling my ads with ugly 150k homes- and i cant make $$ on the cheap homes.
any suggestions( other than moving- which i’d love to do!)?
maybe i’m doing something wrong- all your advise is appreciated!
BTW- where do you all pull your comps from?
Thanks bunches!
Dana_Ohio
Re: property values SUCK!! what to do? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on March 12, 2002 at 08:56:32:
Dana–(OH)------------
I second GL(ON)'s advice. It is a lot easier to buy where the properties are cheap than here where they are expensive. How would you be able to afford $350K houses as rentals if you lived here in Oakland, CA? You probably would not. Revel in your sagacity to live in a place where you can buy properties with good cash flow.
Forget the dreamer who has his house way over-priced. Even in areas with very low and thus good prices, not every property makes sense as an investment. You will still have to be selective and look for the good deals.
Good InvestingRon Starr*
Re: property values SUCK!! what to do? - Posted by Shawn Dostie
Posted by Shawn Dostie on March 11, 2002 at 14:00:40:
Where in Ohio do you reside. Our prices are low here, but you know what, people live somewhere, and there are more people with bad credit than good credit. If they can’t buy, they rent. How about a duplex? Buy for 30k pmts 230 mo. rent for 500 mo. or buy a SFR for 30k and sell land contract for 45000.00 w/ 5k down. Get creative and have fun.
Good luck and we will mentor you if neccessary,
Shawn Dostie
(Ohio)
Re: property values SUCK!! what to do? - Posted by GL(ON)
Posted by GL(ON) on March 11, 2002 at 09:01:10:
I like to BUY low and SELL high.
If prices are in the dirt then it is the perfect time to buy. You can take your pick of low price properties with owners willing to give you any concession in order to sell.
If someone trys to be a rock head then you wish him luck and go on to the next juicy deal.
There is one thing to look out for, here it is. Will values recover? Is the slump temporary, or at least not getting any worse? If everyone is moving away and the place is a ghost town you might be in trouble, otherwise start wheeling and dealing.
As long as the rent will cover the expenses and mortgage payments and give me a positive cash flow I don’t care if prices never go up. Keep buying and in 20 years they will be paid off, and you will own a lot of free and clear properties that make you nothing but profit.
But we know real estate bargains don’t last long don’t we? In a few years it is quite possible that prices will go up. Even with inflation at 5% prices will double in 14 years and 3 months. If they are low now it is more likely for them to double eventually, than if they are already very high.
So keep looking for low priced rental houses and apartments. If things are as bad as you say it is possible that you will be the only one bidding especially on the apartments. So keep looking,and making low offers.
Re: property values SUCK!! what to do? - Posted by JohnBoy
Posted by JohnBoy on March 10, 2002 at 22:15:19:
LOL
Tell the seller to PAY YOU $5k and you will dispose of his problem for him! Then sell it “as is” for $5k with NO QUALIFYING and NO MONEY DOWN! Get whatever you can from any payments from the buyer. If he pays GREAT! If he doesn’t who cares! You got $5k already from the seller and anything from the buyer is just extra gravy! LOL
If you would really love to move, then do it!
Re: property values SUCK!! what to do? - Posted by Dana_Ohio
Posted by Dana_Ohio on March 12, 2002 at 24:31:13:
well, i’m currently in Sandusky- home of cedar point.
but if things dont start looking up…!!!
where are you at?
it just seems like everyone is saying “nice place to vacation, but i wouldn’t want to live there!”
atlanta’s lookin better and better!!!
Re: property values SUCK!! what to do? - Posted by Ronald * Starr(in no CA)
Posted by Ronald * Starr(in no CA) on March 12, 2002 at 08:52:51:
GL–(Ontario)--------------
Sorry to have to do a second posting, but for some reason I could not edit my earlier messages without posting it.
I think that it may make sense to say that in some local market that “low” priced properties have the opportunity to move up more than high-priced properties, because there is evidence that people will and can pay more in the area.
However, I am even questioning that assertion now. Maybe that is not true? Certainly the lower-priced areas within Oakland, CA, where I live have gone up dramatically in value over the last 10 years and the last 20 years. But so have the higher-priced areas. And the lower-priced neighborhoods are still the lower-priced ones, relative to the higher-priced neighborhoods.
Anyway, please understand that I think you give a lot of good advice, I like reading your posts. I just am always trying to understand things well and want to be accurate and see accuracy in other posting.
Good Investing and Good PostingRon Starr***
Re: property values SUCK!! what to do? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on March 12, 2002 at 08:46:45:
GL–(Toronto)-----------
You say: “If they are low now it is more likely for them to double eventually, than if they are already very high.”
I wonder if you have some research that supports this statement? I certainly know that it is possible to believe this way. I tend to think that way myself.
HOWEVER, I sure would like to see some justification for this way of thinking, since I think I have seen evidence to the contrary, at least in relationshipe to prices of houses.
I sold my house in Palo Alto CA in the spring of 1990. I had bought it in 1964 for about $21 or $23K. I sold it for $315K as a fixer. I recently checked on realtor.com for Palo Alto and figure that it would sell for about $550K to $600K, these days.
In 1990 I looked a properties in OKC and surrounds. One could buy houses in poorer neighborhoods for less than $10K. One can still do so now.
We know that supply and demand determined price, as you have suggested, but do we really know that some place with low prices now has more possibility to increase in value in the future than does some place with “high” prices?
I suspect not. I think that “high” and “low” have different meanings in different areas. If the “High” priced houses where Dana is, in OH, are $125K what are the “low” priced houses here in Oakland? Over $125K! Here one can not buy a decent house in the “ghetto” for less than $125K.
So, does that mean that the OH $125K houses are the same as the Oakland, CA $125k houses? Nope.
I think therefore, that unless we see some proof that “If they are low now it is more likely for them to double eventually, than if they are already very high.” is a true statement, we should not offer it as advice to people. At least, not if we want to give accurate, true advice to them.
Good Investing********Ron Starr****************
Re: property values SUCK!! what to do? - Posted by GL(ON)
Posted by GL(ON) on March 12, 2002 at 09:26:26:
I think you may be taking me too literally. You have to use your common sense and intellegence to apply these ideas to your local market.
Here is my point, in plain English. Do not be afraid when prices are low, and greedy when prices are high. I know it is the natural reaction but reason dictates that you do the opposite, and get greedy when prices are low and fearful when prices are high.
I say this because the original questioner was moaning because prices are low and real estate is dead where he is, in Ohio. Well if it is dead and no one is buying that is where the bargains are.
You are from San Francisco/Oakland area. How would you like to be starting out in real estate investing in a boring Midwestern town, where no one else is doing creative real estate, you have no competition, there are motivated sellers going begging, and you can buy all the property you want with low or no down payment and a positive cash flow? Would that be nice or what? And this is in a place with clean teenagers, no gangs and no war zones.
If you were in a place like that would you be p*ssing and moaning about how the market SUCKS and wishing you were in Florida or California where the market is hot?
Re: property values SUCK!! what to do? - Posted by GL(ON)
Posted by GL(ON) on March 12, 2002 at 09:55:27:
Certainly I have research, or at least experience, to back up my statements.
Here it is. In my home town in 1982 real estate was stinko. You could buy a little 3 bed 1 bath rental house for $40,000. Then there was a boom and in 1988 the same house was $110,000. In 1990 real estate started to drop and in 1992 it was $60,000. Now it is back up to $90,000 and climbing. This is the common story of the real estate cycle.
The same exact house. Now would you be better off to buy in 1982 or 1992 at the low, or in 1988 at the high? Exactly. You want to BUY low, and SELL high. I hope this sounds stupid because it is. Until you try it. Unless you have been there you have no idea how hard it is to buy real estate when everything is doom and gloom and it is considered folly and suicide. But that is when prices are low, when no one is bidding. Also it is so hard not to get caught up in the euphoria and keep buying at crazy prices, thinking the boom will never end.
It really is that simple. If you have the brains and guts to go against yourself, and what everyone around you believes, to do the right thing.
Now let’s get down to the fine details. There are 2 kinds of problems that drag down prices. Acute and chronic. An acute problem is one that grabs everyone’s attention, and causes a sharp drop in values. Like a plant closing, recession, tornado, tire fire or flood. In the wake of one of those you can write your offers at 25% off last week’s price and get more than half accepted. There are investors who seek out such crises to buy up houses, rent for a year or 2, then sell out when the crisis blows over and go on to the next town.
The other kind of problem is the chronic problem. Like the problems of old age, it comes on slowly without fanfare and before you know it you are in trouble. Areas with this type of chronic problem may get over it but not for years, maybe not at all. This type problem hit the Rust Belt cities in the 1970’s and some of them still haven’t got over it. Buffalo, Gary, Pittsburgh and places like that. They may come back eventually but until the slide stops and prices stabilise look out. Right now small towns in Saskatchewan are dying on the vine. You can buy decent houses for $10,000 and $20,000 with nothing down.
If we are talking about small towns in Ohio the decline has already take place years ago and they are more or less in limbo, neither declining nor rising. That means they are good candidates for buy and hold. They will come back eventually and in the meantime who cares, if you can take your pick and buy for little or nothing down with a positive cash flow?
Re: property values SUCK!! what to do? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on March 12, 2002 at 16:16:16:
GL–(Ontario)------------------
As usual, you make a lot of sense. Thank you for clarifying your intention. I agree with you. In fact, I don’t even look to buy around here. I go to the midwest/southwest to buy – whatever it is you call OK.
Good Investing and Good PostingRon Starr***
Re: property values SUCK!! what to do? - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on March 12, 2002 at 16:19:52:
GL–(Ontario)------------
Well said. I agree with every point you make. Thanks for the statistics.
Good Investing and Good PostingRon Starr*******
Re: property values SUCK!! what to do? - Posted by GL(ON)
Posted by GL(ON) on March 12, 2002 at 16:41:05:
Just to cap it, check out this new post and my reply. I swear I had nothing to do with the original post LOL.