Actually its more of the time right now to know when to buy back in.
For some of you your futures living in this industry are tainted to some that are not far away from the good times . Seems some of us have to live on the circle and see things change like seasons .
Ive talked about doing your numbers where you live and I think its important whether you are making a living or prosecting .
I do quite a bit of reading on this subject and I was impressed with this article that is talking about the numbers and swings in the market . Ill post a link to it in this thread . Ive had my eye on New Orleans for some time and got interrested in it while doing the Katrina thread . I kept asking myself the question of what will become of all those properties ? How would they be held with no people there ? Its not on the top of the list because of those problems but its there . Some of you live around these spots and it should proove to be an interresting thread that will shed food for thought . So with out any further ado heres the link;
http://www.forbes.com/2007/06/07/housing-trough-resilient-forbeslife-cx_mw_0608realestate.html
If you are good at figurring these things out you could become a millionare . Of course unless you already are one . <G>
Tim
Replies
tim, this is just one of those articles that to me are just a bunch of garbbly gook and what screws with markets that really have nothing in common with the 2miillion plus metropolitan areas.[now if you live in one of those markets read and learn]
you have to focus on where you live and what you know about the area and proceed from there. here in wichita ks if real estate ever went up 12% in a year before or after a bust it would be because they found gold under everybodys property. here a great year would be 3% and a bad year 3% going the other way.
this is what i think is wrong here with the market,people hear these numbers for boston and l.a. and try to apply them here to the midwest real estate market and it will get you in trouble faster than you can blink your eye.
i have seen people that have no bussiness in real estate ,selling their 401k's and buying house's because they read realestate is going up 15% a year.
my thought is ,and you have talked about this,buy when the price is right ,and don't worry about catching the high or low,becuase you won't hit both i gaurentee you that. larry
hand me the chainsaw, i need to trim the casing just a hair.
alwaysoverbudget,
While you have some of it correct,you are also correct in that you must know your own location.
In Kansas because it's basically all farm land there is little location demand. While someone might be willing to pay a slight premium to live in a nice part of town, they will not fight (with their wallets) over certain particular property. Simply move a little further out and there is all that raw farm land to be swallowed up.. The formula there is simple cost of raw land plus cost of building equals demand. Hence property there will always reflect inflation adjusted for demand.
LA, Boston etc. Have a differant basis of value.. kind of locations, Ocean frontage or historic district are two that come to mind in those two locations.. there is only so much ocean frontage in the LA area and far more people want to live on it than there is property to fill that desire..
That's why prices rise as steeply as they do.. Further even if you hate the beach, as an investment it's very hard to beat ocean frontage. Right now there are only about 10 or 20 million people who would like to live on the beach in LA. As retirement of the baby boomers occurs that number will soar to 50 or 60 million people.. For the same reason people want to live in the historic district of Boston. Hence the rise in values.. it's not crazy people paying silly prices at all.
Other locations reflect the desireability of say beach frontage.. if someone can't afford a beach front home how much will they be willing to pay for say a property with ocean views? or near the beach? how much for something a short drive to the beach etc.. another words all property appreciates because some property is in great demand.
I live in a mini sort of LA.. Lake frontage on a near metro lake. property values have appreciated an average of over 10% a year since I was a kid, In fact if you look at lakeshore values since the 1800's even during the depression land appreciated in value on this lake..
The security of that sort of investment makes the desireability of the land less a factor and more of an investment.. How many investments do you know that can yield a steady 10% rate of appreciation and provide you with shelter at the same time? That plus the interest cost of buying said property is tax deductable.. Further and this is the really big one! This is the only investment you can make where a small down payment yields all the gains!
If you put only 10% down on realestate you control the entire gains of the whole assest. Buy a million dollar property with say 10% down ($100,000.00) and when the property appreciates 10% you've gained back your investment and the future will compound at that rate. That's an actual rate of return of 100%
Let's say like now things really slow down,, so you only gain a 5% appreciation that's still a 50% rate of return on a 100% solid investment.. No accountant will cook the books or steal the funds from the treasury.. Homes are required to live in.. your million dollar place could be either a step up for some up and coming excuetive or a down sizing for someone in a much larger home..
And please note, you still have a place to live! No stock, bond, or bar of gold can do all that for you..
Here's the real investment factor.. Homes appreciate in an inflationary cycle. The United States hasn't paid a dime towards the cost of the war in Afganistan or Iraq. that's a lot of money we've borrowed from the chineese and others..
If you do some basic research you see that America has never actually paid for any of it;s wars what we do is allow inflation to eat that debt. Want a simple example? a basic car sold for well under $1000.00 prior to WW2 a nice house sold for about $3000, after WW2 a basic car sold for about $2000 and a nice house sold for about $5000.
You can verify that same equation after Korea, Vietnam etc.. (gulf war 1 was differant in that America actually made a profit during Gulf war 1) I digress,
Anyway we have some inflating to do, you can see it in some items, oil is now about $60 a barrel while post Gulf war 1 it was under 20 a barrel. The basics that make up the list of items used to determine inflation have started up. How much inflation? a lot of factors will affect that. Normally post war things simply double in dollar cost..Housing started up before real inflation started so it's a leading indicator (as it usually is) but I dare say that a decade from now people will be looking at the prices paid today and wishing they could have bought at those prices.. That Million dollar home will seem like a steal at only a million a decade from now..
You getting into real estate sales now?
You're leaving ot the downside of the sales pitch. Payments have to be made. Repairs and maintenance continue forever. Taxes on the asset never stop, only increase. And then this part,
" Further and this is the really big one! This is the only investment you can make where a small down payment yields all the gains!"
You must have missed the lecture on options, commondities, futures, and options on futures. That's how your buddy, Hillary, got started. Member?
Peteschlagor,
Where to start,
All bet's on futures and commodities markets and trust me that's exactly what they are unless you have privy to insider (illegal) information have one major disadvantage, if they drop quickly and they can you have to come up with additional money.. With a house you simply continue to make your payments no matter what happens to the markets and you have a place to stay and someplace that sooner or later will appreciate.. (we have about 150 million more Americans now than when I was born and yet no more land)
Payments have to be made, well yeh! but as soon as you are in an equity strong position you can leverage your investment further! Some banks consider a 10% equity position enough to loan against. Consider the payments as rent, rent that provides you with a fixed payment while inflation makes the payment easier and easier and provides you an equity position . Rent won't remain fixed during periods of inflation, payments will (unless you are foolish enough to get an adjustable rate mortage).. plus don't forget the interest paid is tax deductable..
Repairs and maintinance continue forever, So what! Buy a low maintinace house to begin with and your maintinace can be minimal.. low maintinace is a home that has a stone or brick exterior so periodic painting is minimal, Windows can be no maintinace if you select the right options, etc. etc.etc. Plus you can always opt to have others do the required maintinance.
Rent takes care of those items for you but adds to the cost of rent.. Rent takes the payments adds the cost of maintinance, a usually higher tax basis, and a profit. In a given home it would be more expensive to rent it than to own it unless the landlord is generous.
Property taxes.. you pay for them if you rent or own.. However the rate of appreciation of certain highly desireable properties such as Ocean frontage or historic district is high enough that it's a trival matter no matter how steep the taxes are.. My home for example appreciates well over 10 X what the property taxes are annually..
AS I said you must know your own community and it's history etc.. I'm absolutely positive that there are people who have lost money on property investments.. especially if they think realestate is a quick buck game. However a wise purchase of the right property can and will increase your net worth far greater than any other investment you can make (legally)
frenchy,when did you start selling real estate? lol ,cause you sound like some agents i've met. lets say you went out and bought a millon dollar house setting on the ocean, you sell it in one year for 1.1 mil great profit,oh wait a minute theres a couple cost to figure in.
900,000.00 at 6% intrest = 60,000.00 intrest only loan to keep it simple
property taxes on a millon dollar house here in middle of nowhere 17,000.00
insurance [i'm completely guessing on this one] 3000.00
now it's time to pay those real estate agents 6% on 1.1=66,000
closing cost/title insurance 2000.00
total cost to hold and sell the property 148,000.00 ouch that sucks!
now lets say during this year were living in dream land and this property is leased the whole 12 months.now at one time rent on this would be 10k a month but not anymore. lets hope you get 7000. a month
7kx12 =84,000.00 in rent
you wont get this rented with a 2.00 sign from walmart,leasing agent gets 1st month at 7k.
maintance ? 3,000 [i figure 10% of gross rent on my prop.]
hopefully you got good renters and they don't tear anything up on there way out. you net 74,000.00 rent
net profit 100k plus 74k in rent gross profit 174k less 148k holding cost you net if everything works out this perfect 26k on your 100 k investment.
now if this property sets vacant for a while or property taxes are higher than i figured ,i wouldn't sleep well with this deal.
now if i can get in at 750k i'd sleep like a baby! larryhand me the chainsaw, i need to trim the casing just a hair.
alwaysoverbudget,
I came by my interest in realestate for the purist of reasons..
I wanted to own a lakeshore home on Lake Minnetonka. I remember the joy of being at the lake as a kid and decided when I was very young that I had to own a home on that lake.
During Vietnam when my buddies had pictures of Corvettes or other cars pinned up I had picture of me in a small rented boat out on the lake..
As soon as my military duty was over I went there and started to make offers on property. The timing couldn't have been better! Interest rates were above the state limit on mortgages and only Vets with the GI bill could get mortgages. I could make an offer with absolute impunity. How much do you want for the house? OK, I qualify for that sized loan I'll buy it.. Then the VA would come and check out the home for me and write up everything it needed before they would approve the loan..
Talk about an idiot proof way to buy property.. I actually made offers on 22 properties before the VA approved one for me.. As it was the homeowner took 15% less than she was asking,, and still was required to do major rewiring and plumbing and heating changes to bring it up to the VA requirements..
I owned that home for 9 years and sold it for more than three times what I paid for it.. I thought it was because I had kept it neat and tidy and did all sorts of minor repairs and some remodeling.. a week after I sold it, a former neighbor called me and told me I simply had to get over there and look at my old home.. I did just as the last dumpster full of it had been hauled off..
This home is worth well over 20 times what I paid for it back then.. some of that value is in the home I'm building but most of it is in the value of the land..
I'm not brilliant I simply followed the advice of that book, get rich slowly!
One of the things that you don't seem to understand about property taxes.. If you buy a home among other really expensive homes your property taxes will be much lower than if you buy a home in a new development..
The logic is extremely simple..
Older wealthier neighborhoods has long since spent all the money they need to for the stuff new developments need to. Schools are in and have been paid for for decades, same with police stations fire stations, roads, sewer, water etc..
My community is so wealthy that all of this years bills have been paid, all of next years bills are in the bank and a reserve fund of another years expenses are invested in bonds yielding the city a tidy profit.. We have absolutely no debt! It's actually difficult to spend all of the funds the city has.. We have our own gulf course. a city with a 5000 population has it's own golf course a few blocks from a privately owned golf course worth tens of millions of dollars. We have extremely expensive city equipment that I honestly believe no other city owns simply rents as needed. Our police cars never ever see 100,000 miles before they are retired rarely even 3/4 of that) . In fact we spend over 3 almost 4 million dollars a year for police protecting just 5000 people.
That and my taxes are about what a middle priced new homes would be in a new development.. well,well under $10,000 for a home worth 2 million..
Start to look at what property taxes are in southern California on the ocean.. again it really depends on a lot, like when and where you bought your property but a friend of mine in La Jolla living in a home worth over 20 million pays less than $18,000 a year in taxes..
Interest on mega loans is extremely complex. I can't speak with real authority because I have a modest little mortgage and a modest little home improvement loan. My interest rate is 4. 125% but some of those deals will absolutely fry your brains out.. depending on your appetite for risk and credit worthiness you can get anywhere from 2 to 3 points below prime to a rate which actually pays you money..
The reason for that is that I owned my property over decades and my original mortgage was less than $50,000.
See that's the magic of realestate.. buy it now.. it's value goes up and up and a few decades from now you have a tiny little mortgage on an extremely valuable chunk of property..
I've actually averaged more profit per year from owning my home than I've ever earned in my life.. all of it tax free!
In comparison, money I've invested in the stock market barely has kept even with inflation and that's ignoring the amount of money I lost in the stock market crash of 1987. If I add that origanal cost in I'm well behind.. If I add the amount I lost in that crash adjusted for inflation I'm about 10 million dollars behind.. (Wild azzed guess, too painfull to do actual calculations)
Slightly OT but I came across this story on mortage fraud and love the way the reporter draws the reader into the story...
"She was 22 and tired of exotic dancing for a living. So Irene Thomas bet her future on real estate, hoping that becoming a landlord would be her first step toward exiting the stage.
With the help of Universal Mortgage Inc., a brokerage company in Brooklyn Park, Thomas signed the papers to buy a house early last year. And she kept signing. And signing.
In 90 days, with none of her money down, Thomas had $2.4 million in debt and 10 houses in her name, most in north Minneapolis. Nine belonged to officials of Universal, the same company that handled the transactions for her. "
http://www.startribune.com/462/story/1236301.html
"they are unsuspecting buyers that are the victims"
who the heck are they kidding,she signed documents that said she lived in all 10 house's.
she bought 2.4 millon in real estate without any money!
i guarentee you she went home at night and smiled and thought to herself " this people are so stupid selling me all this property for such a great price"
now what ticks me is i think were coming into the next "savings and loan 's going broke,goverment is going to bail them out"just like in the 80's. and we all pay the bill
larryhand me the chainsaw, i need to trim the casing just a hair.
While I do think that some people were preyed upon by con men and were innocent, we've got alot of people who gamed the system. Bail 'em out? No thanks, I'll just sit on the bank and offer pointers on their floatation technique (or lack thereof).
View Image
Ran across this yesterday
"In just one year the number of households spending more than half their income on housing increased a startling 1.2 million to 17 million in 2005," Rachel Drew, research analyst for Harvard's Joint Center of Housing Studies, said in a news release.
Now, too, stricter standards of some lenders are having an effect on the ability of some would-be homeowners to get into the market, said Jonathan Kempner, CEO of the Mortgage Bankers Association. While products such as subprime and Alt-A loans were "controversial for some people," they did address the affordability issue for many Americans.
http://tinyurl.com/2be48b
I agree with you. She was not blameless in this."Fields had told her they would split $10,000 back for every mortgage closing, she said, but only about $20,000 of that materialized."All I know is I was not ever supposed to talk about this. He said once people found out how much money I would make, then they would start hating on me and I should not tell anybody," Thomas said. "And then once I found out everything was bad, I still didn't tell anybody because I was so embarrassed."She said Fields, who had agreed to manage the properties, collect rents and pay the mortgages, kept the paperwork and keys. She said she has seen only two of the houses.
".
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Is the Wichita market still booming? A couple of years ago I could not believe the growth on both East and West sides. I used to live in Tallgrass which was the eastern frontier at the time. Where is the money comming from? All the Pizza Hut execs are gone, Rent-a-Center must have slowed, Boeing is toast, Raytheon is not setting any records I am aware of as well as Cessna and Lear.
you kinda nailed the market here. boeing is gone,now called spirit,raytheon just sold to the same parent company as who owns spirit,so basiclly boieng and rattheon are taking orders from the same boss.right now it seems good but if that company ever goes down the tubes were toast.
i was selling real estate back when tallgrass and comatara was devolping,it was way east out in the sticks,now it's almost midtown. east side has built to andover with houses, 175k to 750k. west side pretty much the same thing but the high range out west tops at about 400 with most stuff 175-225.
i ask myself all the time where does everybody get the dollars from, i don't know really,most of the bluecollar guys at aircraft make 55-100k with overtime bucking rivets,so i guess if you and your wife are at raytheon and knocking down 15o a year you can afford the 300k and the 2 tahoes in the drive?
as i read post on here about guys on the coast paying a million for a fixer upper i guess we have it pretty good here. i think median price on a home is around 135k now. larryhand me the chainsaw, i need to trim the casing just a hair.
The first time I ever went to Wichita was either 83 or 4. Former employer and friend had condo in Comatara (now in Vickridge). Jabara was still private and 2800 ft. Rock was gravel North of 21st. Those were the days. When we moved there in 87 bought in Penstemon and moved to Summerfield in 93.
Spent many hours at the Candle Club with the Carneys, Devlin and his partner, DeBoer, Mike Weigand, and many other movers and shakers. A life the wife just confirmed was a lifetime ago and not as good as present.
Who did you sell real estate with?
Edited 6/12/2007 11:15 pm ET by rasconc
sold re back in 79-80 just when the 12% and up loans were coming into play. so i starved to death and went back to body and paint work. i sold for a company that i don't even remember thier name,was asscoiated with era.there s a name that went down the tubes,century 21 ate them up.lol
you was slumming with the big dogs there .debor is putting together a deal downtown called "waterwalk" trying to make us like san antonio with that muddy river,who knows if it will work but they sure have downtown tore up in the meantime.
we all should of bought some of that rock rd up by 29th.it was just a farmers field, now whats left is probably selling in the 25.00 a sq foot range ,plus. all the high dollar stuff is building around beech lake now over on webb. larryhand me the chainsaw, i need to trim the casing just a hair.
Interesting but the scenerios you mention all have to do with the US dollar. Buy and selling. If the debt incurred to other countries was in US dollars what you say is correct but if it was in some other currency and the value of the dollar dropped it would in fact take more dollars to pay off. If you borrowed say 1 million Polish kaplodnicks and they wanted payment in kaplodnicks and the value of the kaplodnick doubled (it not who's goes up or down it's the difference) you would have to come up with twice as many dollars. Interest rates would be on the bigger figure also
Also if it is as easy and financially beneficial as you say (and I really don't know) to the US then it must be somewhat of a disadvantage to the other party. After all when somebody gains someone loses. Mind you creative accounting can make it "look" like both are winners. I can't see some country lender/bank coming out short. If it was so good everyone/country would be doing it and they don't. Most countries are trying to pay down their debt and they must have some pretty smart guys running their finances also.
Good post though.
roger
roger
I'm not sure what you are saying,, do you mind if I attempt to guess at your point and see if I can explain things? Please I'm not trying to offend you, I simply think we are speaking about differant things..
First I assume that we are speaking about home ownership.. the normal currancy it's conducted in is US dollars..
If you are speaking about the US debt, that's a whole other case completely..
Yes China or whoever is lending us money may win or lose on the dollars inflationary rise. It depends on the terms etc. that the money was loaned at. Most countries are wise enough to lend short term so they can adjust their interest rate to account for inflation.
Somebody wins and somebody loses, is not always true in international investments.. the goals may be entirely differant for both parties. Lowest rates or best rate of return may not be a priority. You might be attempting to leverage stability thru the use of a less volitile currancy or you may be in a cash rich situation and need an investment that will deplete your cash position while providing you with political leverage..
As I said international banking is extremely complex, unless you have access to all the factors involved it's impossible to even begin to speculate on the real goal or intention of any country..
As for the wisdom of paying down your debt, that may or may not be wise! It really depends on political goals and intentions. . Plus a given country needs to consider it's position relative to the performance of the market. Invest in that mega dam or pay down debt, provide the wealthy with tax considerations or stimulate investments thru tax breaks and loopholes. Provide the middle class with lower taxes in an attempt to stimulate the broader gains they provide compared to the more select gains of the wealthy..
Each nation must adjust according to it's political goals and the world market conditions..
My appologies. When I was talking about Polish kaplodnicks I was talking international debt. I think one of my points was missed when i talked about the difference in the currencies concerned. If the debt was being paid in other than US dollars it is not just what the US dollar is doing but what the other one is doing. The US dollar may be stable and stationary but the OTHER currency controlled by another country may change causing the debt to be paid in more dollars than was expected. Maybe a lot more.
Over the decades Canada has owned money to the US because we(Canadians) owed the money in US dollars when the value of the Canadian dollar fell (compared to when we borrowed it) it cost us more. When our dollar increases as it has now it costs us less money to pay the debt.
If all debts were borrowed within the boundaries of each country debts would be paid dollar for dollar or kaplodnick for kaplodnick and the profits of the borrowing would stay within each country and be of benefit for all in the country.
roger
I think you and frenchy are missing the way exchange rates fluctuate. Countries for the most part do not lend each other money. When Americans purchase Canadian lumber we only have American dollars to pay with. The Canadian lumber company pays wages and expenses in Loonies. The American dollars don't do them any good. At the end of the day the Canadians federal financial institution gets together with the American Federal Reserve Bank and exchanges the monies that were paid in their respective currencys. The difference in trade volume is where national debt occurs.
If 1 billion dollars in lumber is purchased from Canada by Americans and 1 billion dollars in American auto's are purchased by Canadians. Their is no trade deficit and no national debt. On the other hand say Canadians prefer Toyotas and only buy 500 million dollars worth of American cars. We have a trade imbalance. America has only 500 million to exchange for the 1 billion. We now have a national debt. Our currencies exchange rate is constantly in flux and changes based on the imbalance in money and the total volume of currency in print and in the federal reserves computer system for member bank loans. ;<)
Jason
Good point, and well said, but I thought there was a difference in national debt and a trade deficit. National debt (or I always thought) was monies used by the government, not industry, to pay for debts, certain programs promised or otherwise. The trade deficit was what you explained but those monies are between private industry albeit in different countries. Why would government pay any difference in value between private industry? Keep track of and be concerned with trade and be indebted in trade between 2 countries is one thing but lumping it together as national debt doesn't seem right.
As an aside I would think the governments (as all governments are wont to do) would like to keep all bad money figures as low as possible for public consumption. By combining two figures together as you say does not make political sense. ("Political sense"- what an oxymoron statement huh!) :)
Just a quick thought: I wonder if countries figure their own national debt differently. Just a thought.
roger
Edited 6/10/2007 9:28 am ET by roger g
http://en.wikipedia.org/wiki/National_debt
Interesting read. Unless I missed it, I didn't see anything about trade deficit.
roger
The problem lies with the debt clearing at the end of the day. American companies deposit their foreign funds at the end of the day in a reserve member branch. The money is theoretically returned to the forign bank. When there is a disparity that causes one of the countries to release more money. When more money is issued the value of that money decreases in realtion to that currency. Instead of creating more money they can manipulate the quantity of currency in play by limiting lending for the short term or issuing T-bills to put the problem off untill the bill matures. That article touches on it a few times just not in such a blatant way. The article places most of the emphasis on internal debt management through interbank lending practices.
I certainly don't have it totally figured out. It's such a bizare complicated process I have always been fascinated by it.
Jason
Jason99
Well explained, but yes I understand the way things work. Sometimes on the internet you take shortcuts in an attempt to get to another matter and it comes back and bites you in the butt.. On nthe other hand if you don't take those short cuts your posts get so windy nobody reads them..
"my thought is ,and you have talked about this,buy when the price is right ,and don't worry about catching the high or low,becuase you won't hit both i gaurentee you that. larry"
Yes, it was an example of what I was talking about before about knowing our local markets and how .
I do believe that buying at the right price is about all we can depend on . At least at that point we can not only recoup our investment if we choose but we should make a profit .
Doing the math on an area such as this article points to is a good idea if we were looking for a place to prospect. Im not , but what I was really thinking about when I made the thread was that some of us have an insight to a brighter future . There are several Breaktimers around these cities mentioned and the work will upscale when these areas hit a trough.
So in other words if we have a young tradesman here that doesnt have salt on his tail and hes trying to pick a place to make his stand in the world doing what he loves to do, then picking a place with a postitive pull up is better than prospecting for gold after most of the people are leaving the gold rush.
Truly I was thinking about Frenchys and Blues stories of contractors caught in a desolate place in there carreers. If the work was all I had , then I would load the wagon and move. If I made the better part of my living from the work and my family depended on my success working , then I would pick an upscale destination.
I think the thread could mean a great number of things to different people . Its gotta look good to Mike Smith and Piffin since location nailed them. It also nailed Jeff Buck .
To me it would mean that when the demand goes up in an area the price is gonna esculate . I didnt know the investors changed the market though . Thats a new one on me . I had heard rumor of it but I never thought there was that many investors to change it .
Ive got some close friends now in Florida that used to be my real estate brokers. They are retired but they both are still working real estate as investors . DW and I went out there and stayed with them for a week. They are making more money investing than they did with the biggest office here . She plays bridge and he plays golf and they both work the games . She teaches real estate law which is what she did when she was here. They hire her to go different places and lecture to students. She uses that as an opportunity to pick up information . The students have plenty of it they bring in and she grades it . <G>
Whats amazing is they have been picking one deal at a time and going slow . They seem to be turning about one deal per year . They have been hitting some good safe scores. They share a bedroom office with two desks . They prospect apart but when they are closing in on a deal they both work on it . Thats where I learned to do the numbers . Area 1 was a golf course that was being built . They bought 5 lots adjoining it and sold them off . It took them all year to do that deal complete and they netted 150 grand in a safe venture . Not too shabby for two retired folks . I dont believe they put a dime at risk.
Area 2 was a condo which was being built and they bought one before it was built at a discount . I forget now that information but they knew from their study that those condos would be in demand from need in that area. The builder needed money investors and normal working people couldnt buy one with out living in one so it all made sense . They netted 75,000.
Area 3 was another golf course being built . I learned Florida and golf is as common as oranges there. Golf courses are everywhere ! They bought two lots and had a house built on one lot . They could start golfing from the house on that course and come back to the house as it actually joined the course . They built a golf cart garage in the back yard with the driveway headed to the course. They could get in the golf cart and go to the club house for breakfast , lunch or dinner . Apparently that was popular . They sold the house right after they moved in <G> . They had another built beside it and thats where I spent the week. They netted 85,000 off the first house and lot . I never asked about the second house but they are a few places ahead of it and it sold .
They stay in up swing areas. They dont have to live where they invest but they chose one to move to and if a better area comes up they will be living there . They explain that they are retired and they dont have any roots . They want to stay in Florida though if they can. They told me about New Orleans . Its one of my favorite places and they knew it . Im not going anywhere just yet. <G>
Tim
couple years ago,they was less than 100 condos for sale in gulf shores. amny was going for $350k and sold before they was built. Today there are 2500 condos on the market and that 350k condo is now $225k and not selling..Most hated person on the net
Thats what that article is talking about .
When there is too many built the prices are cheap and rent is cheap and cheaper . You see 1 month free and wave the last months rent for a years lease . Ive seen the last month rent being free here . When a feller has 100 units and hes only got 70 rented its crunch time . Same thing with holding a condo or a house with no one in it . They sell them cheaper to unload but the problem is comparisons are taken from the sales of the last 6 monhs for accurate comps . They call it a spiraling market .
What the article is talking about is buying on the rise which is a million dollar question or when its bottomed out and expeced to rise . When is the right time to buy? So we keep up with the numbers of an area we are working in and review the sales comps monthly.
I buy 1100 sqft houses or close. So I keep up with that size house . They range from 1000 to 1400 but 1100 is the smallest house where 3 bed 2 bath works comfortably. A 3 bd 1 bath brings 20 percent less which I find normally with 1000 ft. The best line on return is 1100. They bring the same as a 1400 sq ft house or less. So thats why that size house is my best rental . [Insurance , taxes are minimal] I know monthly what those houses bring on the market so I notice a change immediately. The market has slipped since last fall and they are cheaper now so that means we are declining . When the demand picks up we will see a rise in prices. I stay on the market in my area and thats what I have suggested in doing the numbers. Im reluctant to buy right now but as I mentioned before if its a steal it doesnt matter as long as Im sure it is stealing . That type of buy will work it self out if it will pay out in rents.
Back in the 70s we were esculating at some point about 8 percent per year in this area. Some one authored a book during that time . [sorry I dont remember the author but the information isnt any good anymore ] He stated it was alright to buy at any price that was full retail as long as we picked good locations . He was stating the rise was 10 percent so if we borrowed a million and turned the properties in a year we could have 100,000 a year income not counting good deals where we bought below market . At the time it was close to being true . Actually if a feller was an investor at all he should have been able to make a hundred grand per year with 500,000. I can make a living with no gains in the market as long as they are moving . However I cant fight it if they wont sell and thats what you are talking about .
The more condos they get that wont sell the cheaper the offers. Im sure the builders buiding to sell have been forced out and gone to greener pastures if they arent broke . If you did the numbers and bought when they were at the bottom and looking up you could buy one and live in it for a year making good money. The prices will be back up when the supply doesnt satisfy the demand . Then the builders will be back.
That cycle is going on all over the country. Even in rough times there will be areas doing well if it has reason to. Theres always areas sucking hint teat too. Some areas never feel the declines or rushes and they seem to not be effected. Theres a town down the road that hasnt changed in 30 years. Those boys are makin a livin swappin the same mule back and forth. Its the same population its always been.
Tim