Real estate market crashing down right now?
 

I found this pretty interesting, reminded me of the heated discussion when Lars brought up the topic around 6-9 months ago. I recall there was a camp here claiming that real estate was the best investment in the world even after prices have gone up 200% since 2001 in some areas, while others were more cautious. I never understood property, I'm not a tax, finance & credit expert. I know there are many who made a fortune in real estate, but I can't say I'm sorry I missed the train:

Check out what www.thestreet.com writes about St. Joe's, a billion dollar NYSE listed property development company (full story here).

With people borrowing money against their properties and interest rates set to rise this looks like trouble for some areas. Not only for the poor souls who will lose their homes but for all many of us doing business since people that move back to a 1BR rentals while paying off debt for the next 10 years are likely to have less money to waste on the fun things in life (like online porn).

Or....it's a damn good time to get into the real estate rental biz :thumbsup

I disagree completely.... nothing makes living in a shitty 1 bedroom apt better then getting to jerk off to great porn (and smoke and drink yourself silly).

Cheap rentals might benefit big time in this scenario, good thinking!

The link below is more specific to the SF Bay Area.. but some VERY good information.

http://patrick.net/housing/crash.html

Hell, grab a foreclosure and rent it back to the previous owners :winkwink:

What's going to be interesting to watch is the flipping market. I suspect it will NOT be as good as it's been in most areas. Thankfully I live in a resort area where a lot of retirees are moving to from FL, and if FL has another big hurricane season, they'll come even faster. I'm trying get my hand on as many development lots as I can. I'm too inexperienced to deal with the houses, but there's a LOT of great flipping going on up here.

Out here real estate is going up up up. I think thats because there is so much land out here. Lots you can do if you buy 20 acres or more.

The peice we own has more than doubled since we bought it 3 years ago.

Thanks for the link. Good info. I found this scary

The last part in an upwards rally is usually pure leveraged speculation by momentum players. That's the time to get out... but then again, we're all greedy, always hard to be the first to leave a party that's in full swing.

hopefully it crashes and burns that way i can buy me a few properties. sit on them for 5-10 years and flip em for 3 times as much.

The market is booming in some areas and starting to die in others. I am building houses in an area that has gone up about 30% in the last year. At the same time I own a condo on the AL gulf coast and market there is down about 15% in the last year. Even though it is dropping it is still worth Double what is was worth when i bought 4 years ago. So i am not complaining. However some people in the building who bought right before the decline are losing their ass.

The realestate "market" is not busting, some areas are hot, some areas are not. Evening in a declining market there are still opertunities, there are always opertunities, just have to find them.

I like it. :upsidedow

And people scoffed at me when I was buying mobile homes on land.
I never cared about the houses, I only cared about the land. The mobiles are just cheap rentals that always cover the mortgage and I still have the most valuable part, the land.

Sure they are not in the best areas all the time, yet. Though they are very popular with seniors and they are not in parks.

Yes the real estate "market" is busting.

That's like saying the Dow and S&P 500 crashed, but my stock in XYZ corporation is doing well, so the whole market isn't busting.

Obviously every single house out there won't go down or stagnate in value, but the market as a whole is in for a very rude awakening

Opportunities will always be there for long term players, I agree. That goes for all markets, especially right now as we speak.

All asset classes have begun to shake out players since a few weeks. Stocks across the globe (Emerging Markets are being slaughtered since that's where lots of the hot money went), oil, metals... plus US real estate in some overheated areas.

Once this bloodbath is over I think there will be some cheap opportunities in all markets... at some point, when things bottom out. God knows when that is. And only for the ones who were disciplined enough to survive without panicking, sounds so easy but it's not.

hey nice link good reading thanks

Thanks for the reading enjoyment.

Everyone thinks Good times will last, Everyone thinks Bad times will last.

sounds like 1BR rentals will be where the action is.. That's why I'm looking into buying duplexes. Even if the housing market drops people will still need to rent. :winkwink:

was thinking exactly the same :thumbsup

:thumbsup :)

i've seen it happening. properties in Miami are dropping as much as 15% in value. sure there are condo's popping up left and right, but developers are having to drop their prices now just to get the sale.

It's also happening to other communities around the central / south Florida area. not that these builders are hurting for profits... but the prices are definitely coming down!

the area i invest in is pretty solid, but at the same time no way can i expect the value to sky rocket in a couple years. i buy cheap houses to rent out though, so thats how i make my money. if people lose their houses thats good news for me, i just means theres more people who want to rent.

A lot of people who thought they were going to get rick quick are now realizing they are about to get poor even quicker.

:thumbsup

:thumbsup exactly what I was thinking.

:pimp :pimp

the speculation flip market is softening in the high end due to market correction.

but, there are still MANY properties in the midwest that can be bought at approx 100Xmonthly rental value.

and for investment these are areas worth considering.

for least investment risk and best ROI properties should be purchased based on market rent multipliers, and there are many places in USA you can do this.

but not on either coast.

think KS, NB, SD, MN, IN, IA, OH, etc.

There are good deals and bad deals going on. If you're smart and know how to shop and have some access capital you can do great today. The weather disasters are a both a benefit and a detriment.

On the other hand, there are the constants of couples who buy a home, end up getting a divorce and the house goes to the wolves.

Outsourcing jobs is causing an inability to make those mortgage payments too. Good deals to be had there.

What's also good is you don't need money down. They're so hard up for someone to take over a property they're practically giving houses away. No dough at closing either. No forms, no proof of income. All you do is assume responsibility and make the payments, insurance, taxes and utilities and you can rule. They just want someone, anyone, to take over a property and put some money into it.

We mostly here work remote. We don't have to go to an office so we can sit at home with a DSL line and have a nice day. What's cool with that is you only need to hold the property for one year and you then decide to refinance or sell. Either way you're making more cash accessible.

I just talked to a pal who bought his house for $70k about 10 years ago. It's worth $250k today. His mortgage was fixed and he only pays $450 mortgage. Sure he could pay it all off but he says why?

Yep, you can find some awesome deals out here and if you work remote it's a heckuva lot better. All you need to bring home after taxes is $2k a month and there are some kick ass houses out here. 30-fixed that is.

I just bought my first one. Same theory. Paid a little more then what the land was worth and I got the trailer too. Not bad trailer. Rent from trailer will pay off loan in about 5 years. Plan on buying about 20 like this. Then in 5 years when they all paid off i will buy a couple acres, make a mobile home park, move them all to it, and build cheap houses on my now empty lots (which i owe nothing on) and i continue to make rentals 20x $600+ month with no more mortgages....
win win .... key is to buy trailers/lots in mixed areas where there are also houses. You dont want to build a house in the middle of the trailer park, but moving out a trailer and building a house in an area with other houses is great!

Don't you find being a landlord a major chore? The time involved and the liability?

Unless you KNOW your tenants that is.

there are plenty areas where the market is still strong or holding. It is not bursting.

I think the problem is that a lot of people are looking at real estate as a market place instead of a long term investment. They are looking to cash in right here right now. This is not the stock market. They buy a piece of overpriced land and then expect o sell it two months later for more. Thats not how it works. What they should do is develop the land they have and then sell it.

Just like I did :)

Also ... you must avoid being greedy. Why wait around to sell a piece of property and make 250K when you can sell it right now for less but at least you get the money in hand.

How in the heck do you find the time to do all this and run your online business too? Charging $600 is sweeet. Some people don't get the fact that they can get a great house for that much so they depend on guys like you to provide shelter which they'll pay for. Do you hire handymen to maintain them all?

Exactly. Real estate done well is the fastest, surest way to wealth there is. Legally that is.

It doesn't take long. A 1-5 year plan and you can walk away EASILY with $500k in cash and a net worth much more. And no money down at that if you work things right. I just don't like being a landlord. Too much of a pain in the ass. Me, buy a property or two, put some elbow grease and equity into it and let it grow in value. You can sell it down the road if need be.

in some countries the real estate is single way of investment, accessible for big part of people. and so, this market is growing without stop there.

interesting thread :)

Trailer lots are great - if you can find somewhere that has lax zoning. Even in my little town they've changed the laws as to what you can bring in.

:2 cents:

this is true.
In many developing countries real estate prices grow very fast. You can make good business!

In my area housing has still went up another 30% this year and lakefront properties have increased 100-110%. With that said though, I live in one of the current highest housing markets (according to a recent msn release). People here are shitting bricks about their property taxes and most are hoping the market drops soon. I hope it at least hits a plateau here soon. A lot of expensive land here too (priced high) and thx for the idea of finding some nice land with shitty trailers on it... Maybe they're being overlooked here for some nice deals.

im pretty new to it, it hasnt been bad so far. when i get more houses i think it will be, i plan to hire someone when it is. the way my business model is setup though, i can pay someone 10% to landlord and still make a profit.

Yes, for smart people real estate is ALWAYS a great investment. Not all real estate is a great investment. But the right real estate always is. Find the right thing for sale at the right price. Do it wrong and overpay and yes, expect to lose your money. Paying too much in Cali these days is dumb as an investment, it was pretty dumb a year ago.

Do you not understand english???

In "some areas" it's doing fine, but that's like saying "a handful of stocks" are doing well despite the stock market crashing.
When the overall market bubble bursts, the bubble bursts....just because 2 zip codes out of 100 hold their value doesn't mean the bubble isn't bursting.

Capice?

If you missed this train there's always a new one coming. And never catch a falling knife or how was it? :)

I'm all liquid in cash savings right now. Sold stocks and bonds on the first dip in May. Now i'm waiting some months/years when it's time to find some bargains ;)

hehe, you should take a peek at the canadian real estate market if you want to be confused.

Those that think that land lording is difficult must either have had real terrible experiences or have heard from others that did.

Early on for me it was rough, I figured it would be easy and I was rather relaxed about it. Lesson learned. I find it very easy now as long as you are stern, do your homework, and have all your ducks in a row. Overall I only spend a couple hours a month doing "landlord" shit, and I do not use a property management company aka people who rob you blind while fucking you.

Oh and the mobiles I buy are typically out in the middle of nowhere on at least an acre or in areas that got semi redeveloped with houses. I never ever do parks.

Price wise they make sense as well. I can get a double wide often with other buildings on property (sheds, garages, other units, etc) on the city grid and often without septic on say ten acres for around 150-200k. Where a house on a quarter acre if that would run 200-400k min. Then if you are so inclined the mobiles can be depreciated on your tax returns, plus less property tax.

It will start with high end properties. Then the lower end properties will crash as the "0% interest roosters" come home to roost. It may be a tight squeeze between rising oil prices and crashing housing prices.

Regardless, behind every problem lies an opportunity. I wouldn't be surprised at all if a new crop of millionaires arise from this situation. Happy opportunity hunting, guys.

Nice, I might actually buy my first home in 2 years... Thanks dropping prices!

I have been involved in the Real Estate market here in Australia for many years and in my opinion is that there is only one really bad time to buy.
When you can't afford to keep it!
By that i mean the only time you will ever loose money is when you a forced to sell.
I am friends with a lot of people who have large car yards, luxury boat manufacturing and sales and are worth many millions of dollars, all have the same advice "you will only ever make money from Real Estate".
There companies are just income to buy more property.

The other saying is "It's not timing in Real Estate it is time":2 cents: :thumbsup

For someone who isn't making money on the internet that sounds like a good plan, but for someone that pulls $40k easily online dealing with all those low income renters and properties seems like a major pain in the ass.

Where do u find these deals at in So Cal? Are these like foreclosures or something?

I rent rooms out for $150 a week on a 8 bedroom house.

Bought it for $30k cash in Philly and now the casino's are moving in ... Its now able to get $600k at a sale. ... Time to cash out and get a new rental house :)

If someone defaults on an assumed loan in many cases the original party that took out the loan is still responsible .... That is one reason assumable loans are easy .....