Its good to know you I gave you a good laugh.
Oh and just in case anyone reading this is wondering …there is very little money in alpaca farming. I have done the research, and its what business people call a “niche market”. Oh well I guess I’ll settle for real estate…jk.
Hey Chris just to let you know, I went out and bought “Rich Dad, Poor Dad”. Its a good book, it gives a good insite into the “rich” mentality. Oh and I’ll promise to try and live well below my means. I also bought a book called “Find It, Fix It, Flip It” but I think I struck out with that one. Anyhoot. Good to hear from you.
In the DFW area we have two major clubs, each with several hundred members on the rolls. Meeting attendance has dropped by a third in each.
The club leadership cites a principal reason being newbies who last year did their first rehab in primary rental areas. I don’t know if it is the main reason, but I will say it is certainly a valid one, having seen so many newbies fall into this trap.
What most beginners don’t realize when rehabbing an older home on a street of 80% rentals, even tho the numbers work on the 70%ARV formula, there are no retail buyers at ARV when the rehab is completed. The only buyers are landlord investors, and they don’t pay full retail.
Sadly, these newbies put in all the work, yet are lucky to escape without losing money. One unprofitable deal and most of these folks walk away saying REI doesn’t work.
It works great, but you just gotta be wise and slective.
Our membership is at its highest level in 12 years, and our market has been flat for 4 years. The reason the groups are down in Dallas/DFW is because there are more of them. I know the REIO group is actually up.
The size of real estate groups has a lot to do with how they are run and how much competition there is.
Basically the fad is ending, the bubble has burst and there aren’t as many newbies as their once were… and many that came around in the last few years have learned hard lessons and moved on.
Now they are going to all go make money in stocks daytrading.
There are certainly a lot of newbies who make this basic mistake, but they were making this same mistake last year and the year before. I think this may be a legitimate argument for “retaining” members, but the basic problem is the pipe line has slowed down.
In our area, attendance has also fallen off, but I think if may be that our market has peaked and some of the luster may be waning. Also the people who would be prospective members might have already joined, leaving less in the unsigned pool.
Really? The founder of one of the clubs mentioned that at the meeting this morning.
We moved from Calif. last year and was shocked to see the other (bigger) REI club meeting full (with a big line to get in), because there isn’t really appreciation here. In Calif. it was easy to make money–anyone who bought real estate before 2005 (and got out) made money. You didn’t have to buy low or smart. If you just hold on to it for a few months, the price went up! (or doubled in a year!!)
Here I wasn’t sure what was attracting tons of newbies.
I don’t know about speculators going into day-trading or not, but I do know that interest in real estate is fading as the upcycle ends and the downcycle starts.
Here in San Diego, the San Diego Creative Investors Club (SDCIA) was almost disbanded in the mid-1990s for lack of attendance. The housing cycle had peaked in 1990 and hit a bottom in late 1996. In 2005, SDCIA monthly meetings are often packed with over 500 people.
In fact, dozens and dozens of real estate clubs have formed all over the state of CA in the last few years. As the CA real estate market goes into its inevitable downcycle, I can almost guarantee that the wash-out rate for real estate investment clubs will be huge.
Like the markets, investment clubs go through cycles. In a rising market, everybody looks like a genius. In a falling market, that’s not the case because more skill is required.
What bubble has burst? I really do not think that you statement is very accurate at all? What can you cite to prove your statement? I invest all over and haven’t seen one bubble burst. Actually, I think that the fad that is receding is that with the RE lingo/terms. Haven’t seen too many catchy terms pop up. It is very interesting, though. Those with the knowledge and will power invest. Those without it, well they tend to think up cool terms and are here today and gone tomorrow.
As you may know I live and operate in Pittsburgh, PA… and I have a saying about it… by the time a FAD hits Pittsburgh, the fads pretty much over…
Well it hit Pittsburgh in the last year or so, and true to form, the end was pretty much in sight.
The RE group I joined 4 years ago, had 350ish members, today its near 800… last year or so meetings have had 75 newbie guests per meeting checking it out… investors from other areas have started to buy here seeing our low acquisition costs… unfortunately most don’t remotely understand there is a REASON… Just last month someone called bragging about how they got this killer deal on EBAY… guy was from Cali, bought a house here for 20k that needed work… and honestly believe he had a deal… and he was going to sell it for 80k… well I don’t have any clue where he got his comps, but in that neighborhood 20k-30k is a move in condition house retail… of course that’s assuming you could even find a retail buyer as most everything there is owned by either investors who specialize in sec8 rentals or by owner occupants who have owned the houses for 40 or 50 years.
I know its hard for folks from high dollar and rapidly appreciating markets like that to understand, but yes, even a big 3000 square ft 5 or 6 bedroom 80 year old victorian with all original woodwork in move in condition can only be worth 20 or 30k retail, but its true.
Hell, I’m debating putting everything I got on EBAY and selling it to someone from NYC or CALI and then just pocketing my cash for a year or two and buy up all the foreclosures that are coming… predictions are something like 16% increase here for the coming year and we had record foreclosures the last 2 years.
HAHAHAHAh…Dave that was funny. I read it and I am kind of tired so I didn’t pick up on the sarcasm right away. I was like “alpaca farming?? That sounds cool.” Thanks for the laugh man.
Re: Day trading? How passe’ - Posted by Chris in FL
Posted by Chris in FL on April 05, 2006 at 15:38:17:
LMO!!! Thanks for the chuckle.
We all know serious investors can make money in any R.E. market, and tough times will wash away the wannabes, leaving less competition for those who know what they are doing. That is overdue, because the flood of inexperienced investors with $$$ signs in their eyes made it tougher to find bargains. Here in central Florida, REO’s and foreclosures actually sold, routinely, at 100% ARV. Yes, cost plus repairs actually equaled 100% ARV. I guess their thinking was “it will go up in value while I repair it”, which was true for a while there. These “newbies” and “out-of-towners” would put a ton of work into a fixer-upper, and at the end of the day they would have invested 100% of ARV. They could have bought the identical house next door, for the same dollar investment, without doing any fix-up at all. Maybe they just had to keep their crews busy? It was comical. Needless to say, those continuing to follow that route might not be so lucky in the future. To all you newbies out there, do yourselves and favor and stick to this rule, expecially when first starting out: make your money when you buy! Best wishes!
