Anyone stepping up and starting to buy distressed RE yet? REO and HUD stuff that can be had for a song rehabbed and rented for cash flow. And then wait 10-12 years for the appreciation. Could be the best buying opportunity in our life times.
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Real estate deals
- Thread starter Dr. Zhivodka
- Start date
If the experts are correct and this coming Winter is to be very cold for double the current number of forclosures, next Summer may be better buying grounds to rescue desperate sellers, depending on where you are geographically. However, I would never hold a trade overnight, and investing in RE to me is like holding overnight for 10-12 years.
Success.
Success.
IMHO, and this is an opinion that is based more upon gut feel than anything else, the carnage is really going to start as of november as the fall selling season ends.
I see homes that have been on the market for over a year in my (once) high-end neighborhood, reduced several times & now being joined by hold-outs who are getting nervous about their retirement and putting their home on the market in hopes of catching the fall selling season.
Perhaps there are a few nible sellers and (unwise or unlucky) buyers out there, but it just seems that too few buyers are there for simply too many properties. Once this structural/seasonal activity ends, forget it. A lesson in illiquidity will occur.
The deals are coming but they aren't right now. And they will probably require cash to execute. Gonna be a whole lot of pain in the middle.
I see homes that have been on the market for over a year in my (once) high-end neighborhood, reduced several times & now being joined by hold-outs who are getting nervous about their retirement and putting their home on the market in hopes of catching the fall selling season.
Perhaps there are a few nible sellers and (unwise or unlucky) buyers out there, but it just seems that too few buyers are there for simply too many properties. Once this structural/seasonal activity ends, forget it. A lesson in illiquidity will occur.
The deals are coming but they aren't right now. And they will probably require cash to execute. Gonna be a whole lot of pain in the middle.
Quote from Dr. Zhivodka:
Anyone stepping up and starting to buy distressed RE yet? REO and HUD stuff that can be had for a song rehabbed and rented for cash flow. And then wait 10-12 years for the appreciation. Could be the best buying opportunity in our life times.
No-one on this forum would have the guts or foresight to do anything like that.They're all listening to that skank Olick on CNBC look for the worst possible components of EVERY housing figure so by the time they're ready to pounce,some sovereign wealth funds will have block-bought all the foreclosures and they will have done exactly what they were always going to do - NOTHING.
Quote from Dr. Zhivodka:
Anyone stepping up and starting to buy distressed RE yet? REO and HUD stuff that can be had for a song rehabbed and rented for cash flow. And then wait 10-12 years for the appreciation. Could be the best buying opportunity in our life times.
Just understand there is no efficient pricing in real estate. A 3 bedroom house on one street can sell for a much different price than a similar house just a few blocks away. It all has to do with the motivation of the seller.
There are deals out there right now in my area. These are situations that are well under the current market value. Some institutions are that motivated to get rid of their REOs.
It's just a question of penciling your deal out. Make sure that you make your profit going into the deal. That means that after repairs and all other costs (like insurance, taxes, holding costs, closing costs, realtor fees, etc etc), you can resell the property immediately after the repairs are done.
I like to be in that situation even if I am going to hold the property. But, if I'm going to hold, then I figure out what my cash flow is. I won't hold anything that doesn't give me positive cash flow right up front. Again, this is after deducting for all expenses like taxes, insurance, repair costs, lawn mowing, management fees, snow removal, advertising, vacancy and bad checks. If you have a positive after all these deductions, you got a deal. You can hold this type of deal comfortably until the market regains normalcy. That may be a while.
OldTrader
Quote from OldTrader:
Just understand there is no efficient pricing in real estate. A 3 bedroom house on one street can sell for a much different price than a similar house just a few blocks away. It all has to do with the motivation of the seller.
There are deals out there right now in my area. These are situations that are well under the current market value. Some institutions are that motivated to get rid of their REOs.
It's just a question of penciling your deal out. Make sure that you make your profit going into the deal. That means that after repairs and all other costs (like insurance, taxes, holding costs, closing costs, realtor fees, etc etc), you can resell the property immediately after the repairs are done.
I like to be in that situation even if I am going to hold the property. But, if I'm going to hold, then I figure out what my cash flow is. I won't hold anything that doesn't give me positive cash flow right up front. Again, this is after deducting for all expenses like taxes, insurance, repair costs, lawn mowing, management fees, snow removal, advertising, vacancy and bad checks. If you have a positive after all these deductions, you got a deal. You can hold this type of deal comfortably until the market regains normalcy. That may be a while.
OldTrader
Perhaps these "deals" you speak of aren't really deals and that maybe current market value is over-inflated? Real estate "values" are based on what comparable homes are sold at, not what someone actually wants to pay for it. And worse yet is that these "values" are determined by bimbos with big tits and part-time housewives. You want them valuing your equities? then why would you let them value homes? Agree with the rest of your post.
Dr. Zhivodka, I spent all day going through REOs in Phoenix, AZ yesterday. And, with all the current and soon to come foreclosures, offering the bank what they owe LOOKS incredible, but will it get even better?! RE is regional, but looking at the numbers, (Phoenix) it is going to be 2010 at the earliest till this region potentially turns, IMO. I simply could not believe what i saw yesterday reviewing foreclosures and REOs ALL in the best/most expensive locations in Phoenix. And, at actual numbers of recent SOLD REOs by the banks. Amazing! I started the process yesterday for putting my home on the market, and selling low, but got the cash and will be trading up. I cant believe others dont see the "spread trade", and hit the bid to get out! Thankfully, not everyone is a trader. hehe.
Quote from Dr. Zhivodka:
Anyone stepping up and starting to buy distressed RE yet? REO and HUD stuff that can be had for a song rehabbed and rented for cash flow. And then wait 10-12 years for the appreciation. Could be the best buying opportunity in our life times.
IMO the trouble is that the 'hoods where one can pull off those bargains in mass are pretty scary places to recruit renters.
Even the best deals I've heard of in SoFla aren't cash flow positive. For instance I met a young woman a couple of months back who'd just bought a small 1bd in a mid-rise on the intracoastal for 125k. She figured it could be flipped for 140-150 (not her intent). But to a "landlord" even at 125 it would probably still be cash flow negative. (HOA's, taxes, insurance, juice against maybe 1k-1100 in rent) Getting close though.
I think you're on the right track. Rentals are both scarce and bid but the supply of resales is so staggering I think p/e's coould get as narrow on the puke as they were stretched in the boom. And even in L.A. where resale supply isn't tremendous (Westside) it seems like some friggin' rental building comes on the market every other day. Something has to give.
Quote from Dr. Zhivodka:
Could be the best buying opportunity in our life times.
Could be.
Karl Case,a professor of economics at Wellesley College and co-creator of the S&P/Case-Shiller Home Price Index sees "encouraging" signs for US housing.
The right house(s) at the right price,that you can really afford for the long-term(but renting out without hassle would be a nice bonus).
Sounds like a good opportunity to me.
I live in the Tampa, FL area and have been looking for deals in decent neighborhoods that cash flow or break even but haven't found anything. You can buy stuff in highly undesirable neighborhoods and become a slum lord but who wants to deal with that hassle just to make a few very hard earned bucks. Anything that is close to the city and in a nice neighborhood is still priced way above any possibility of cash flow. Prices have definitely come down and in some cases are below construction costs but that doesn't make them a good investment. I've seen some big drops on water front property but can't convince myself that it would be worth the gamble i.e. rehab and maybe live in it for a couple of years with the hope of selling much higher if/when the market turns around.