What he said.
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What he said.
lingcod, the difference between MD9 and the guys you've seen on TV is the guys on TV are trying to sell you something. MD9 isn't peddling a "Make Money in Real Estate" DVD. And it's not like he's telling people to go out and get a shitload of interest-only loans. He's just giving some advice.
I'm pretty sure MD9 isn't really telling us anything you can't get from watching 'Flip This/That House' on the DiscoveryHGTVTLCChannel on cable. Seems to me that he's just saying that there's good things to be had with a reasonable amount of sack, luck and good research. That doesn't seem too different from nearly any investment strategy.
I think it's awesome MD9. If you've found your calling, run with it.
My cousin is 50 now, he started buying, reovating and renting properties in the Boston area when he got out of college. At one point he owned 36 properties. The market was good, he got sick of being a lnadlord, he sold them all, he hasn't had a job in 10 years now and he's rich. He watches his investments and pulls together little property development deals in his spare time, but mostly he coaches his kids' sports teams, sails his big ol' sailboat and skis.
That's great and all, and I'm sure there are many people out there like that. OTOH, I would bet that there's 2-3x as many people out there like this poor sap:
Bad Times for Leo in SW FLA
LIngcod, hey nobody is putting a gun to anyone's head. We all come from different walks of life, MD9 is obviously a nice enough guy to share what he does for a living with us. Real estate is about numbers, him not bullshitting us, like the rest of the world, is of value. Obviously the guy does the grunt work, soemthing most of us would not do, and thus would not prevail as easily as he does. Additionally, using a 15yr is not only an alternative to just playing the appreciation game, but also stiffens up the equity requirements.
Likewise, for the avergae schmuck like me, your words of caution are noted in this enviorment.
Uh... because that guy made the mistake of getting himself in over his head doesn't really indicate anything other than his own stupidity. All investing is a scary game. Markets are not friendly places.Quote:
Originally Posted by Tin Woodsman
If someone were to lose their money playing something like blackjack in vegas where there roughly equal odds over time, people don't feel sorry for them. I don't understand the 'woe is the borrower' sentiment.
Buyer beware. The value of good research is unquantifiable.
Quote:
Originally Posted by Tin Woodsman
I'm a particpant in the SW FLA RE market and know this area fairly well.
The guy in that story is typical, and the lesson is applicable of any investment, which is, "know the market".
What MD9 is doing is completely different. He's buying undervalued properties and through his own sweat, bringing them to market value.
People like the guy in the story are very common down here. They don't have the skills to do "fixer uppers" and instead invest in new construction. and hope market appreciation bails them out. This worked well for about three years, but not anymore.
If you look at the numbers, MD9 has a positive cash flow off his properties. He's not depending on appreciation at resale for his profits. Sure the R.O.I. may not be great measured against the acquisition cost. However he did the bulk of the work himself to bring them to market value. This means no increase to the acquisition basis.
Unless I'm wrong, I believe his intent was to share something that has worked well for him. How many people do you know that hate their jobs or feel under challenged, under appreciated, or just feel that they were meant for more in life?
If you have a good income and do what you want with your most valuable resource ( your time) Isn't that the real american dream?
Nicely said.
That's cool. Feel free to interpret my sharing of information however you will. I'm glad you think I'm headed for a fall (maybe due to skiing or drinking, but not due to work). In a few years we'll be able to look back at this thread and what's happened in the meantime. I don't "have it ALL figured out", but I do have this little niche figured out. When someone asked about commercial I think you'll see that I said "I don't know much about it". And I've always encouraged everyone to "do their homework".Quote:
Originally Posted by lingcod
If this were an idea that needed patenting I'd obviously keep my mouth shut, but there's no shortage of homes in rough shape that need help. Hell, even if this were the ad biz (where I've earned the money to invest in Real Estate) there's no way I'd tell you who my client contacts were and what I'm charging and how I'm making money there. There are some businesses where that just doesn't work and you could risk future earnings.
There are a lot of shitty landlords that let places go to waste, lazy home owners, elderly who can't handle the upkeep. Two houses I've bought were an inheritance to a family member and they wanted cash rather than a beat-up old house. Another two were from shitty landlords who slum lorded. They didn't put any money into the houses and didn't maintain the properties. They just worked the cashflow as hard as they could until they fell apart. These places need to be put back together and there's no shortage of them.
My dad retired in his 40's and now mountain bikes most days in the summers and skis most days in the winters. While he was working towards an early retirement he told all of his friends about what he was doing, gave them books, etc... None of them took his advice. They all still work and none of them really hang out that much anymore. I'm sure he'd much rather have them up on the hill with him. Most of what I learned I learned from him and he's been willing to share info with anyone who's ever asked. I know of numerous maggots who've asked for his advice on financial matters.
http://www.nytimes.com/2006/10/03/ny...0ee&ei=5087%0A
"While many of the highest home values were on the coasts, in places like Southern California and Manhattan, many of the biggest jumps in the percentage of people paying a burdensome amount of their income for housing occurred in the Midwest and in suburbs nationwide, making it clear that the housing squeeze has reached deep into the middle class."
MD9 -
I'm psyched that you've found a niche that works for you. Obviously, ,you do a lot of research supplemented with your own sweat - always a good formula for success in any business. That said, much of this discussion has focussed on the state of the housing market as a whole. I think it's fair to say that your particular niche in the location of the SLC metro isn't exactly typical. Sounds like your approach will be successful in even flat markets as you are creating the appreciation by yourself instead of relying on the market lift. I hope for your sake that you don't pull the trigger at the wrong time b/c it's likely you've never seen a real deep housing slump when nothing is selling. Sounds like you've got some cushion stemming from your success to date though, which is good. You know your gig better than I ever could, but just be careful - this market can turn on a dime b/c, though the real estate industry would like you to believe otherwise, consumer sentiment/psychology plays a HUGE role and can easily overhwlem the alleged "fundamentals".
Your case is not typical, and a LOT of people are going to get hurt, some b/c they're stupid and greedy, and others b/c they just had bad timing.
Just got off the phone with a buddy who got a 4bdr house in 07043, multiple bids, payed over, has been watching the market for about 6 months here, kept losing out.
So is he sucker?
94580 Bay Area California anecdotal:
two houses directly across the street from me for sale. Both dumps. One is owned by a flipper. The other needs $50k work to be liveable and is currently occupied by retards.
No one has even looked at these houses in almost two months. The flippers price has dropped $30k so far.
Good houses continue to sell in the area.
Bernanke today:
"The housing correction will take 1 point out of GDP".
That's HUGE! The fed got what they wanted so this is good news. The bad thing, he said CORRECTION. That means lower prices ahead.
Stocks and bonds are going to rally.
Bernanke said it was "difficult to tell" how long the slump in construction would last, because both buyers and sellers have moved to the sidelines with uncertainty over prices. "It is a little difficult how the dynamics are going to play out," he said. "At the same time, I think there are some strong fundamental underpinnings that should help the housing market over the medium term, he said. These include: a good job market, strong income growth, demographics and continued low mortgage rates, he said. "Ultimately, the housing market is going to be supported by those factors," he said.
Bernanke said there was limited evidence that weakness in the housing market was hurting other sectors.
Flopper Casualty:
http://www.sfgate.com/cgi-bin/articl...carollloyd.DTL
I thought you'd be talking about this one:Quote:
Originally Posted by 4matic
http://www.latimes.com/news/local/la...home-headlines
Classic:Quote:
Originally Posted by 4matic
But he also exemplifies the way in which real estate has become a spin factory of hedging and hype. Serin bought eight houses in eight months in four states with no money down. [with mediocre credit and no job]How, pray tell, did he do this? By his own admission, he applied for and got no-money-down, stated-income loans by inflating his income, sometimes getting primary residence loan rates by claiming he would live in the houses himself. The offers, he said, often had "cash back" clauses, in which he would get money back from the seller after closing, which the bank didn't know about. (This means that a bank, thinking that the sale price was higher, was actually financing not 100 percent of the loan but, say, 110 percent.)
Holy crap. That's insane. It's amazing that kid pulled that many houses together on no real income in that amount of time. If he knew what he was doing he might have made a killing rather than be buried in debt and maybe on his way to jail.Quote:
Originally Posted by 4matic
This is a cool thread. My dad invested in real estate for along time and recently cashed it all in and retired. He allways tried to get me interested in it but I was too distracted by other things. Now though, I am old enough to understand what he was trying to tell me back in my 20's when I was too busy fucking off. I bought a condo 6 years ago and it has almost trippled in value. I just bought my first house and used equity to put down a nice down payment. So I am going to rent the condo and break even and hope for more appreciation and rents to increase,while I live in my new house. In 5 years I will see where both properties are at and hopefully do it again. They are both in a nice area of So Cal and there is no more construction happening. There is no more land to build on so in theory value can only go up. I guess if you play your cards right with real estate eventually you can retire with a nice lump in your back pocket. I hope I can do the same as my dad
...........................
Quote:
Originally Posted by LA Daily News
So where's all the money going?
Dow, baby. No maintenance costs or tenants in my 401k. 'Bout time for a little bull action.
http://www.nytimes.com/2006/10/20/re...e/20ski.1.html
"In her multiyear search for a mountain retreat, Anne Bodine-Cresci saw prices in Stowe, Vt., rise higher than the mountaintops. Her quest was framed by an increasing number of million-dollar-plus homes, pricey fixer-uppers and a limited supply of new listings. “Some places,” Ms. Cresci said, “were going for a lot more than they probably should have.”"
It's interesting to see people's opinions based on where they live. Case in point, what I'm seeing in Park City is vastly different than what md9 is seeing in the valley. Of course, we've tended to trend closer to the coasts as most of the people buying here are coming from there and doing 1031's.
Very interesting thread though.
btw, md9 has his shit together and I wouldn't worry about him getting too far over extended or over confidant in his dealings based on the conversations I've had with him.
Here in non-resort area Montana, we are seeing a slight slowdown in buyers, but we aren't really expecting a major price readjustment...just longer time on market, and maybe more aggressive offers from buyers. (You can get a totally pimped out house on five acres for $500,000, and there are plenty of 5-10 acre parcels of bare land for sub $200K).
But we also have a booming non-tourist based economy in our little valley, and multiple biotech businesses will be hiring dozens and dozens of highly educated and highly payed people in the immediate future.
http://www.nytimes.com/2006/10/27/bu...=1&oref=slogin
October 27, 2006
New-Home Prices Fall Sharply
By JEREMY W. PETERS
Home builders, struggling to keep ahead in a weakening market, cut prices and offered a variety of other discounts in September to help sell their newly constructed houses, the latest government and industry statistics show.
The Commerce Department reported yesterday that the median price of a new home plunged 9.7 percent last month, compared with September 2005, falling to $217,100, the biggest such drop since December 1970.
Statistics from the National Association of Home Builders showed a similar slide. Builders reported cutting prices in September by 5 percent, according to the association’s most recent data.
Just two months ago, prices of new homes were still on the rise.
At least to some extent, the lower prices achieved the developers’ goal: the backlog of unsold new homes on the market fell in September for the second consecutive month, while the number sold, adjusted for normal seasonal variations, rose by 5.3 percent from the previous month.
http://www.nytimes.com/aponline/busi...f53&ei=5087%0A
October 26, 2006
Home Price Drop Is Largest in 35 Years
By THE ASSOCIATED PRESS
Filed at 8:36 p.m. ET
WASHINGTON (AP) -- Is this what a housing bust looks like? New home prices fell last month by the largest amount in 35 years and owners are being warned to brace for further declines, especially in formerly hot markets.
After years of increases, some buyers say prices are still out of their range.
The Commerce Department reported that the median price for a new home sold in September was $217,100, a decline of 9.7 percent from September 2005.
That was the lowest median home price in two years and the sharpest year-over-year decline since December 1970, providing dramatic evidence of the slowdown in the once-booming housing market.
Housing Market a Drag on Economic Growth
By THE ASSOCIATED PRESS
Published: October 27, 2006
Filed at 9:58 a.m. ET
WASHINGTON (AP) --Economic growth slowed to a crawl in the third quarter, advancing at a pace of just 1.6 percent, the worst in more than three years.
The latest snapshot of the economy, released by the Commerce Department on Friday, showed that the slumping housing market figured prominently in the economy's dramatic loss of momentum. Investment in homebuilding was cut by the biggest amount since early 1991.
The reading on gross domestic product was weaker than the 2.1 percent pace many economists were forecasting.
'The housing bubble burst and that really knocked down growth,''said Joel Naroff, president of Naroff Economic Advisors.
http://www.nytimes.com/2006/11/07/re...rtner=homepage
"The striking contrast tells the tale of a housing bonanza turned bust. Today, the number of unsold homes in the area has soared to almost 46,000 from just a few thousand in early 2005. And builders are pulling back as fast as they can.
They have little choice. Sales cancellations among big builders, not just here but around the country, are running as high as 40 percent, double the rate a year ago."
http://www.nytimes.com/2006/12/06/bu...ab4&ei=5087%0A
"The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading. Depending on which set you look at, you’ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year. But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept."
Not here in Teton Valley, Idaho...which is personally ironic. I just got my real estate license, but I am am more an advocate for extremely limited growth...I guess I have become one of those nefarious 'close the gaters'....Quote:
Originally Posted by Benny Profane
BUT, I just don't see this valley able to accomodate the MASSIVE plans that are taking shape (10,000 new houses...in Teton Valley!)
Targhee is starting to get crowded now...just imagine...
WTF? 10,000 residences? Jackson is 10,000 people, isn't it?Quote:
Originally Posted by rideit
Here's a graph of what's currently happening in Salt Lake County. Average home prices have climbed nearly 20K each of the last 2 quarters. It'll be interesting to see what happens at the start of 2007. While I'm completely strapped for cash right now I feel damn good about holding 4 UT properties through this climb.
http://www.tetongravity.com/forums/a...1&d=1165507920
I've been noticing lots of interesting ways to make money out here. Rent prices aren't following home prices and therefor neither are the prices of duplexes. In the zip code I'm working in the current cost per square foot for a home or condo is $220 per square foot. You can buy duplexes for closer to $100 per square foot. I looked into converting legal duplexes into townhomes or condos (basically a flip on paper) and then sell them as muliple units rather than one for the much larger price tag. The only problem is it looks like it's a 4-5 month process with lots of bureaucrats getting involved and wanting checks along the way (which doesn't really work for me and the speed I do things). Just saying there are a lot of different ways to approach a market and find niches that work for your particular skill set. Swinging a hammer isn't mandatory, but getting creative is.
md, I take it you haven't sold your project houses yet? Have you been showing them much? That astronomical rise in prices would have me sweating.
MD9 - pay attention to the green line.
That can't keep increasing at the same time the blue line keeps going up.
At some point, oversupply will depress prices.
- i still think your market is far from collapsing, though.
Given the time of year I've had quite a few showings. One lady almost bought both properties (they're next door to eachother). Also, they just announced a new redevelopment here in SLC that's one block away from the properties (re-doing ZCMI, and crossroads mall as well as some other properties surrounding the area, much like Cherry Creek in Denver). I figure the properties will go early in Q1. There's a shitty lot (borderline impossible to build on) the exact same size as one of properties we will soon be selling for only 15K less than our fully remodeled house and it's 2 blocks further out of the city. I've seen it under contract twice, but I'm sure peole quickly see there's no way to build. Hopefully I'll wrap up the remodel for the second property and have it listed within a week.
Fortunately I bought the houses for dirt cheap. I've got a 200K margin on one and a 100K margin on the other. The prices I got them for are well below prices three years ago on that chart and they're in the spendiest part of town. I've always been of the mindset that don't make money when you sell real estate, you make it when you buy. So in other words, don't buy if it isn't a crazy good deal.
over the long haul real estate has proven to be a winner. anyone with 1/2 a brain and some cash can play. there will always be undervalued property in any type of market. find it, shine it up and make some money.
a buddy of mine recently made 85k in 4 months renovating a flooded out trailer that a golf course had paid him to haul away. all he did was buy a plot of land to park the trailer, remodel the interior with a nice kitchen, added on a small addition for a master bedroom, some wood siding and a roof facade so it didnt look so much like a trailer anymore. he took out a 100k interest only mortgage to buy the land/material and sold it for 185k. he did all this in a flat market where nothing was selling.
its fun listening to him tell the story about all the people who laughed at him when he 1st parked the flooded out trailer on his recently purchased land.
Just to be clear, we are talking about Teton Valley, Idaho, which currently has about 3000 residents, including Victor, Driggs, and Tetonia.Quote:
Originally Posted by cj001f
Technically, it is platted to be legally possible. There are at LEAST 3000 new homes going in in the next two-three years, (as planned today), and that would only eat up a tiny percentage of the private and develop-able ground over here. It is insane...The Huntsman project, just to the west of Driggs, (those big, wide open fields you see past the big buffalo on the main corner) is going to be 1800 homes. And that is only ONE of dozens of big development projects. There are plans for 6 golf courses, as well. This is a huge valley, and no-one is making any money growing seed potatoes...all the old school mormons are choosing to grow McMansions, instead. It's nuts...and I am in the middle of it, and so incredibly conflicted. We really are gonna need another ski area, or at least run a Tram to the top of Table Mountian...and then on up to the backside of the village....and then one down to Taylor...Trois Vallee, you got nuthin' on what we could have here!:mad: :redface: :confused:
Quote:
Originally Posted by meatdrink9
It doesn't look like that trend will continue, at least if you look at the Salt Lake County stats for October (the first month of the 4th quarter). Average price is up only $2,000, and another big jump in listings. The market definitely seems to be flattening out.
If you have last year's October numbers for comparison, you might want to have a look at them very closely.
Not that it matters that much, because you have a big cushion on your current properties. But tread carefully until you see where this is all headed.
Even here in Calgary, which had the hottest real estate market in North America (average prices were climbing $500 a DAY for a couple of months), things cooled off all of a sudden in October.
But since my house rose in value almost 50 per cent in the last year, I can't complain. :)