Posted by Killer Joe on March 18, 2007 at 10:20:24:
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What’s on the OTHER Side??? - Posted by wanabee
Posted by wanabee on March 17, 2007 at 07:31:03:
For all of you experts out there who predicted for about two years now the RE forecast “clouds from the housing market moving in, settling over most areas with a near 100% chance of sustained severe weather, likely corrosion from the subprime lending sector causing tidal waves with hurricane winds, and tsunami like market conditions throughout MOST if not ALL areas of the country”… can anyone actually speculate what is to come on the other side of this “bad weather”??? What type of real estate investing will still be “open for business” during this “storm”?? Would like to hear some opinions from those with a clue (and a plan)…
–wanabee
Re: What’s on the OTHER Side??? - Posted by michalea-CA
Posted by michalea-CA on March 17, 2007 at 19:02:35:
There is not ONE market. There may be common denominators in various cities, but even in the same city there are many different markets. Maybe it’s by school district, by size of home, by location, by price, by tendencies in certain neighborhoods, the type of buyer that area attracts, the age of the house, closeness to certain amenities…and…and…and
There are always criteria that may help an area to buck the trend. I’m about to move into the SanFrancisco area end of this month. Investors there are all complaining that you can’t make money there. But I guarantee you, I will still find ways to make money. You just need to be open to work with whatever method that could work for the market, instead of being stuck with one business model.
Re: What’s on the OTHER Side??? - Posted by Dave T
Posted by Dave T on March 17, 2007 at 14:05:54:
In the 80’s and 90’s I bought foreclosures to hold for rental use. In the early 2000s, I 1031 exchanged a few of my highly appreciated properties into new properties at preconstruction prices.
The preconstruction market has slowed down and buyers are not as motivated as they had been. These days I am still buying a preconstruction deal every now and then, but mostly waiting for the increasing inventory of foreclosures to depress distressed property prices.
Now that the market cycle is about to come full turn, I will become a foreclosure investor again. Funny how this cycle repeats every 20-25 years or so. The foreclosure prices are higher than the 80s, but in 2017 the resale prices will be about double what the market is now.
Re: What’s on the OTHER Side??? - Posted by phil fernandez
Posted by phil fernandez on March 17, 2007 at 13:54:25:
In this down market I plan on buying some single family houses with generous owner financing with interest rates of 0%. Also the day of the short sale is back. I plan on making numerous lowball offers to our friendly bankers.
Upon acquiring theses heavily disounted SFH’s,I’ll rent them out and wait for the next seller’s market.
Re: What’s on the OTHER Side??? - Posted by Sailor
Posted by Sailor on March 17, 2007 at 12:51:57:
Expert I’m not, but I’ve been around long enough to be one of
those doom n’gloomers here in 2005. That’s when I followed my
own advice & ca$hed out. It isn’t that my strategy has changed–
I’m still strong on bread & butter housing–but my mkt has
changed because my target tenant can no longer afford a SFR.
I bought a MHP & then some L/Hs, w/some raw land on the side.
I also dipped my toes into paper.
Recently I’ve also decided to sell my residence, which has held its
value due to location & a deepwater dock. Plan to move 30 mi. to
a booming micropolis, where I’ll be able to bank the difference. I
think a strong ca$h position is going to continue to be a good
strategy, as it apprears we are no where near bottoming out in
many areas. Although I’m already planning to sell my park, I’ll
likely stay in MHs for the foreseeable future.
Flexibility w/contine to be important, too, as goals & strategies
need to be re-examined often. There is $$$ to be made in up-
markets, & just as much, if not more, in down-markets. A lot of
savvy investors have been rubbing their hands w/glee as the
downturn has progressed. To me, the worst mkt is one that is
static.
So who else has a plan?
Tye
The land of milk and honey - Posted by David Krulac
Posted by David Krulac on March 17, 2007 at 12:29:19:
When FDR was running for president in 1932, at every stop the band would play Anchors Away, since he had been the Sec. of the Navy. He got tired of hearing that same song over and over again, so he told the band to play anything except Anchors Away. so they palyed Happy Days are Here Again. It became his theme and he was elected president at the height of the Great Depression.
This is nothing like the great depression, where I believe that unemployment reached 25%. Just as Happy Days returned after the Depression so will Happy Days return after the great subprime tsunami. I don’t know when, but I feel confident that good times will return. If I thought that good times wouldn’t return I’d sell all my real estate and invest either in some other vehicle or some other country.
I’ve been investing for 4 decades in real estate. The worst times that I personally experience were 1981/1982 when mortgage interest rates were 16% to 18% fixed for 30 years. Even then I was still looking, and still buying, though I wasn’t doing awhole lot of selling at that time. The days on the market were often 1 year +. 50% of the real estate agents dropped out of the business, because there wasn’t any business.
I was buying in 1981 and I’m buying in 2007 and I’m selling in 2007. I’m looking for flippers, keepers, farms, raw land, individual lots and commercial space. Two years ago you could be a little looser and there was lots of competition running up the prices. Less so today. But that means that on the back end there’s no going to be as many buyers either. So today your pencil needs to be veyrsharp and you need to work the numbers and make sure that the deal makes sence and that it will make dollars too. I looked at a property last week that was a 1950s ranch house with 3 bedrooms, needing a bunch of updates. My price for the property was about 64% of asking, it sold for more than asking and there were multiple bids. I was being conservative and lost the deal. In today’s market I’d rather be conservative all day long rather than overpay for a property. I’ll walk rather than lose money.
This not the market to speculate, IMHO, but its not a market to run away from and hide either. Look for the good deal, and look for the value, a diamond in the rough, value overlooked by other. You need to know values of property and the costs to make changes in your area. What does carpet cost, what’s a kitchen cost? whats a bath cost. You need to know those prices so that when you see a property that needs such and such, you know what such and such costs. The best way to learn is yo actually do it, the more houses/property that you buy the easier it is.
Re: What’s on the OTHER Side??? - Posted by Killer Joe
Posted by Killer Joe on March 17, 2007 at 09:30:18:
wanabee,
When I bought my first rehab in 1996 you figuratively couldn?t even give houses away. In fact, the local market had not seen any appreciation there since 1989. But the fundamentals of any good deal persist regardless of the market. As the dollar amounts ratchet downward, they do not preclude you from making wise choices regarding the value that you assign to any given property. This is true whether you are buying, selling, fixing, renting, or whatever else you could do with a property such as having it razed and rezoned for a better use.
What has infected the market for the last few years prior to the collapse of some markets is the mentality that you could engage in speculation and the outcome would be of a positive nature. We call this the ?Greater Fool? mindset, and while that concept has all but gone out of fashion, the fundamentals of what make a real deal profitable are still with us.
The point I am trying to make is that if you have the ability to recognize the true value of any property, the chances for making money in this ?new? market are the same as they have always been. Job One for you as an investor is to get a firm handle on the current and future value of a property for the time frame you will be holding the property, such that there is room to profit from your energies whether you are buying to hold, or buying to sell.
If you are buying with the intentions of selling for a profit, and the market is headed downward, you must adjust your offers to coincide with the future value of that property when it gets sold. If you are buying to hold for the long term you need to purchase the property in such a way, either cash or terms, that the property will provide a positive cash flow. Again, it is a function of the value that you assign a property that will influence whether it becomes a profitable deal, or an alligator. No one is holding a gun to your head requiring you to enter into buying a deal that will make you lose money. Unless you are already involved as the owner of a property that is facing liquidation, such as foreclosure, there are very few circumstances that will cause you to lose money that you did not create yourself. Mother nature may throw you a curveball, but the markets move so slowly that if you can?t see the writing on the wall what you have is a self-inflicted wound.
So to cut to the chase, the answer to the question ?What type of real estate investing will still be open for business during this storm?, is that any method you choose that takes into account the true value that the market will assign to your property, whether it?s the going rate for rent, or the FMV at the time of sale, will be a viable method for investing. It is up to you to determine the dynamics of the market you are investing in, and apply whatever method(s) work for that market. In many markets the only strategy that no longer works is speculation. And speculation has never been considered as a form of investing. Its results, however, have certainly confused the boundaries in a lot of folks minds up to this point. HTH
KJ
Speaking of the other side… - Posted by Cletus
Posted by Cletus on March 17, 2007 at 19:30:23:
Michaela,
Nice name change, I mean the Mich-a-lea one. Are you on your way to Hawaii after you’re finished with CA? Wish you’d hang around here more often, some of us miss you (me).
Hope everything is going well.
Later,
Cletus
Re: What’s on the OTHER Side??? - Posted by Kai
Posted by Kai on March 18, 2007 at 12:07:08:
One thing that is constant is change! I’m an RE Investor as of the last 4 yrs. I have had to change my game plan half a dozen times because of what the market is doing. As a newbie can you suggest any literature on what to look for in forclosures now that it will be dominating the market? Any suggestions would be very much appreciated!
Re: What’s on the OTHER Side??? - Posted by Bill H
Posted by Bill H on March 17, 2007 at 13:56:28:
Sounds very similar to what we did, Sailor. Everybody said we were craxy to sell a building throwing off 500K per year in positive cash flow. We saw it otherwise and SOLD…are we glad we did!!! YOU BET!!
This year I think will be the start of a banner year for properly invested tax liens and tax deeds. I see lots of opportunity, with the subprime sinking, ARM’s rising…lots of GOOD things could happen with tax deed investing.
We too sold and moved. Nicer quieter neighborhood. No more bother with the “Hi-Class Hoodlums” of the golf and country club we used to be into.
LIfe sure is peaceful and I think it is only going to get better.
Good LUck,
Bill H
Nice Post…Good Information. - Posted by LK
Posted by LK on March 18, 2007 at 07:41:06:
It puts it all in perspective.
You would think that investors being more conservative would help compensate for lower offers, but there still seems to be a lot of investors willing to pay higher prices.
I have tightened my buying due to the market and because I have more knowledge after each deal.
I’m just having to work harder and learn more creative ways to make it work with my criteria.
I’m glad there are so many others willing to pay so much more for properties than me, because they are my customers.
Re: What’s on the OTHER Side??? - Posted by Kai
Posted by Kai on March 18, 2007 at 13:24:49:
KJ, Thank you, your followup was very helpful to me.
Re: Speaking of the other side… - Posted by michaela-CA
Posted by michaela-CA on March 17, 2007 at 19:37:08:
Cletus,
my friend.It’s nice to be missed ;-). I missed you, too. But actually, I was trying to be incognito.
Yes, that’s it. That’s my story and I’m sticking
to it ;-). I guess it didn’t work.
Michaela
Re: What’s on the OTHER Side??? - Posted by Dave T
Posted by Dave T on March 19, 2007 at 20:53:23:
Not quite sure what you are asking. Foreclosures won’t dominate the market. The vast majority of resale property inventory will be retail resales with mortgages in good standing.
All I was saying is that as a buy and hold investor, I have to change my property acquisition source to adapt to the ebbs and flows of the market. Real estate has a cycle – peak to valley and back to peak again. Selling at the peak of a hot market, buying in the valley of a slow market gives me optimum entry and exit price points.
I just choose to focus on foreclosures (REO property) when we are at the deepest valley of a slow market because the lenders with foreclosures are experiencing increasing inventory. They may become somewhat motivated sellers (but not always).
Re: Nice Post…Good Information. - Posted by David Krulac
Posted by David Krulac on March 18, 2007 at 12:10:49:
looked at a property figured a lot of work needed, several people bid more than asking. I can’t see how they could possibly make any money, but more power to them.
Re: Speaking of the other side… - Posted by Wayne-NC
Posted by Wayne-NC on March 18, 2007 at 07:13:58:
You mean Michaela-CA aka Machaela-ATL,aka Michaela-FL (Jacksonville)? Aloha! Why would you not want to be recognized? I hope you don’t have IRS problems. LOL You seem to be a moving target. Well, your weekly “top 10” has been missed. How many remember that(and its’originator)?
PA Tax Codes - Posted by Bill H
Posted by Bill H on March 18, 2007 at 15:56:11:
David,
I need to look up something for tax sales in PA, Do you know what section of the statutes or codes it is in?
Thanks,
Good Luck,
Bill H
Re: Speaking of the other side… - Posted by michaela-CA
Posted by michaela-CA on March 18, 2007 at 08:24:39:
yep,the one and only-like to keep people guessing ;-).
Nice to be missed! I just had to take a break.
Re: Speaking of the other side… - Posted by RichV(FL)
Posted by RichV(FL) on March 18, 2007 at 08:22:55:
Wayne,
The top 10.
That was Tim Fiero…I think he was the one who started it.
Boy, I’ve been slumming here a while now. 
RichV(FL)