Real Estate Crash thread

[ColMan]

Wanna tank home prices in the mountains? Tax STRs as commercial real estate:
https://www.summitdaily.com/news/sta...to-a-tax-hike/

Seems like it would be pretty easy to get around the 30 days owner occupied requirement. There's no way they could put in a control here to verify that an owner was physically there for 30 days. Block it off for 15 days in early May and another 15 days in October.

[liv2ski]

In my hood the town rules for STR's is a minimum 28 day lease per rental and they occasionally take owners to court for violating the rule. If every town had that 28 day minimum lease rule, then there would be a lot less STR's out there.

[Core Shot]

^I think that helps explain the rise of populism on both sides. Non asset owners got fucked hard by quantitative easing and stagnant wages.

I watched a really interesting long form PBS interview with Steve Bannon recently. He goes into this in pretty serious detail in the first 20 minutes.

https://youtu.be/pm5xxlajTW0

I thought I hated him, turns out he has a pretty solid grasp on the economic realities of neo-feudalism. His solutions are very different than mine though.
.

Bannon was trumps brain. The key to his election. He understands the average schmuck. Not that he lived it personally, but he’s smart enough to get it, and to focus group it.

[Mazderati]

So who is buying? Who is selling?

[LesterSmoove]

short term rental owners are the greediest mother fuckers out there
I've never met one who isn't they are so concerned about their rental income and not missing out on a single dollar
they pay a measly 100 or so dollar fee to the town/county and that's it when I become county commisioner I'm going to up to a 2,500.00 yearly fee
the local polticians can't pat themselves on the back enough when it comes to "affordable housing" if they really had some balls and cared they would tax the shit out of short term rentals
and who gives a fuck about the real estate market collapsing, give me a fucking break, I hear that all the time when it comes to a complex or neighborhood banning short term rentals through their hoa
asking a realator for an opinon the truth or trying to get a straight answer out of one is impossible I've never met people so full of shit in my life especially in a mountain resort town
end of rant
tax the shit out of short term rentals they all act like it's a hobby when it's a business
most of them are so strung out financially since they are betting on rental income when the economy hits the fan it's tits up for em

and on a side note the local sewer district is going to start charging short term rentals a higher fee, instead of a 4 people flushing a toilet on regular basis you've got 10 people cramed into a three bedroom flushing the toilet alot more

quoted for god damn truth. and as harry said, who gives a shit if home prices go down as a result of a govt. policy? big problem in this country is that so many homeowners think they are legally entitled to constantly rising home values, and spineless county commissioners who need the $50k/year stipend for part-time work are scared of those 65yo busybodies voting them out of office.

[shroom]

So who is buying? Who is selling?

i’ll probably look buying in the face in the next 6-8 months but am still dragging my feet at the thought. if it goes that way i’m shooting for something low end with some upside or multi family if we’re in the same market. i’m an opportunist with my money so this should be a shit show. we may just rent again if savings rate is still high.

though at this point, i’ve watched many houses in target market sell twice in this rally. luckily we started low.

[liv2ski]

Buying 2-4 unit properties is the way to go if you can Shroom. Much better cash flow. Down side is typically larger down payment requirements than a 1 unit property.

[skaredshtles]

Just what I always wanted... 4x the home ownership headaches.

[shroom]

Or just pay cash for a spot near the office so commute is shorter and no mortgage.

#boomerlogic

i laffed cause this is both of my parents

[Self Jupiter]

Buying 2-4 unit properties is the way to go if you can Shroom. Much better cash flow. Down side is typically larger down payment requirements than a 1 unit property.

Can buy a 2-3fam that you plan to occupy with 3.5% down FHA or 5% conventional with PMI round here in MA. I got lucky and bought a 2-fam I owner-occ before prices got too crazy. Living pretty cheap helps me stomach wishing that I lived somewhere else.

[AdironRider]

A paid off three family pretty much guarantees you a solid retirement also.

[skaredshtles]

<snip> Living pretty cheap helps me stomach wishing that I lived somewhere else.

I dunno, man... sounds rough. ++vibes

[Mazderati]

Looking at a mixed-use basket case in an A+ location locally and B or B- location nationally. Commercial down, residential up. Existing commercial wants to stay and when fully rented the note would be covered but the building is old and neglected and there is a good chance any money made gets recycled into constant repair. Had an architect walk through and the advice was a) do nothing and let it ride or b) tear down and start over. Considering (a) in the short-term and (b) in the long-term but it's a long time to be locked in and opportunity cost plus risk etc etc.

[AdironRider]

If truly the best location in town I'd say let it ride, it'll rent (triple net of course) as long as it is structurally sound.

It sounds like the initial asking price is too expensive though ultimately.

[liv2ski]

Can buy a 2-3fam that you plan to occupy with 3.5% down FHA or 5% conventional with PMI round here in MA. I got lucky and bought a 2-fam I owner-occ before prices got too crazy. Living pretty cheap helps me stomach wishing that I lived somewhere else.

Nope on 3-4 units, but 2 units will work with 3.5% down on a FHA loan. The mortgage insurance is a major waste of money with FHA, so I encourage buyers to go conventional, but you need more cash to do so on units. Which by the way helps a bunch with a better cash flow and paid off units are my retirement income.

[Self Jupiter]

Round here you can do a 3-fam on those terms. Just texted a loan officer to confirm.

[fastfred]

So who is buying? Who is selling?

staying put
why sell when you have an in town resort property worth 2-3 times what you paid

and yeah I thought I was the only one jerking off and thiking about building apartments
so much high end apts getting built these days, building shitty basic apts is the way to go huge underserved market for avg rent prices
have all the shit ready to go numbers done just need some investors whose in?

[Mazderati]

so much high end apts getting built these days, building shitty basic apts is the way to go huge underserved market for avg rent prices

Around here the only thing separating shitty basic apartments from 'luxury' apartments is manufactured granite and a stainless frige.

[liv2ski]

Round here you can do a 3-fam on those terms. Just texted a loan officer to confirm.

Nope, see the below FNMA Matrix. To qualify for units with less down you have to fall into "low income" guidelines which means you won't qualify for shit anyways. But if you can make the numbers work on a "Home Possible" program, go for it.

[Benny Profane]

Just what I always wanted... 4x the home ownership headaches.

Oh, it's much more than four times. Now, you have tenants. They're never a problem, never.

[Benny Profane]

...

[Ted Striker]

Looking at a mixed-use basket case in an A+ location locally and B or B- location nationally. Commercial down, residential up. Existing commercial wants to stay and when fully rented the note would be covered but the building is old and neglected and there is a good chance any money made gets recycled into constant repair. Had an architect walk through and the advice was a) do nothing and let it ride or b) tear down and start over. Considering (a) in the short-term and (b) in the long-term but it's a long time to be locked in and opportunity cost plus risk etc etc.

If truly the best location in town I'd say let it ride, it'll rent (triple net of course) as long as it is structurally sound.

It sounds like the initial asking price is too expensive though ultimately.

The asking/offer should be in line with the net income/prevailing cap rate in that location, minus deficiencies. If you don't know the cap rate in that area, you could look at the gross rent multiplier of the comps to see where it is in the market. (I personally don't like GRM because operating costs vary so much)

If there aren't any really comparable comps, what's the land worth? If it burned down a week after closing would you be financially ruined or would it be a blessing in disguise?

[iceman]

If the answer's that it would be a blessing, I know a guy.

[dunfree]

If it’s in the northeast, hardpass

[Mazderati]

The asking/offer should be in line with the net income/prevailing cap rate in that location, minus deficiencies. If you don't know the cap rate in that area, you could look at the gross rent multiplier of the comps to see where it is in the market. (I personally don't like GRM because operating costs vary so much)

If there aren't any really comparable comps, what's the land worth? If it burned down a week after closing would you be financially ruined or would it be a blessing in disguise?

Cap rate in the neighborhood of 7.5 to 9% excluding ongoing repairs which would likely be significant. Think 30 year old HVAC, boiler, and roof. The value is in the land but the owner somewhat reasonably wants to get paid for the building on it and the money it generates. Insurance would be for replacement value with ordinance riders so catastrophic loss would be covered. Upstate NY.