Real Estate Crash thread

[rideit]

The market here is ticking along.
The uber-wealthy are still buying, they weren't affected as much from what we can see.

Anything $250-$400, selling like hot-cakes. (That is basically considered 'affordable) $500-$1m, softer, (but we are not seeing price reductions)

$1m-$10m, slow, but it always is this time of year.

Due to no GMAC or HUD programs, almost everyone shopping is looking for a larger loan or a jumbo anyway, or have a good bit of cash to begin with.
Obviously it is not a 'normal' market.

I am thinking of advertising in Moscow, London, and South America...seriously.

Might as well list in Euros.

[bucbanzai]

I am thinking of advertising in Moscow, London, and South America...seriously.

Might as well list in Euros.

SW FL

Over 5M....good

1M to 5M...slow

500K _ 1M....really slow
500K - 1M condo.....30 sales a month when it used to be 300.

250K - 500K.....prices down 30% in two years, still too high. Sales down 50%.


But Hey, the Realtors are talking about what a great time it is to buy.

BTW rideit, anything priced over 1M is also quoted in Euro...

[panchosdad]

The market here is ticking along.
The uber-wealthy are still buying, they weren't affected as much from what we can see.

Anything $250-$400, selling like hot-cakes. (That is basically considered 'affordable) $500-$1m, softer, (but we are not seeing price reductions)

$1m-$10m, slow, but it always is this time of year.

Due to no GMAC or HUD programs, almost everyone shopping is looking for a larger loan or a jumbo anyway, or have a good bit of cash to begin with.
Obviously it is not a 'normal' market.

I am thinking of advertising in Moscow, London, and South America...seriously.

Might as well list in Euros.

This is makes no sense. Uber wealthy aren't buying the 250-400K houses. Maybe they're buying in JH, but not in Teton Valley. Single family listings in the 250 to 350K range, which I track regularly, are showing very little movement. Condo/duplexes are seeing a few sales, but not near as quick as inventory is coming on the market.

A few numbers to mill: Last 22 weeks, 45 homes sold, 44 lots (according to Real Estate Scoreboard). So that's about 100 of each per year. Current inventory on the MLS is 1251 lots, 368 houses. Five foreclosure notices in the paper this week, mostly in the $1M range.

I agree there's not much downward movement in prices yet, but seems to me it's got to be coming.

[rideit]

I am talking about JH

[Benny Profane]

I am thinking of advertising in Moscow, London, and South America...seriously.

Might as well list in Euros.

You should. Gravitylover tells me that 30% of his sales of very expensive mountain bikes as his lower Manhattan bike shop are to visiting Euros. it's what's fueling the whole NYC market for many things.

[Benny Profane]

Glum forecast for much of suburbia... walkable urban neighborhoods the desire of tomorrow;

That's a very interesting article. Kinda supports what I've been saying for some time, that the Macmansion suburban excess will get hit by three factors - the boomers going into old age and scaling down, and long term higher energy costs, and out of control property taxes that the states and localities have to keep jacking up to pay for their profligacy over the last 30 years. Jersey is the epicenter of all three.
I still don't think that most people want to live in cities, though.

[enlosandes]

That's a very interesting article. Kinda supports what I've been saying for some time, that the Macmansion suburban excess will get hit by three factors - the boomers going into old age and scaling down, and long term higher energy costs, and out of control property taxes that the states and localities have to keep jacking up to pay for their profligacy over the last 30 years. Jersey is the epicenter of all three.
I still don't think that most people want to live in cities, though.

Yah, but where else can you go down the shore on a Saturday night, get a hummer in the bathroom, and see a Bon Jovi cover band? That has to be worth something!

[Benny Profane]

All the chicken littles who bitched about high RE prices that hoped and prayed for the market to drop so they could afford to buy a house should get in the game. Foreclosures may not be the most feel good way to buy a home, but it sure makes it affordable.

Not yet, good buddy, not yet.

[DisArray]

A $50,000 stinking pile of shit, like a $500,000 stinking pile of shit...

...is still a stinking pile of shit.

Sorry for all of you greedy bastards that got caught holding the bag.

[ass-to-mouth]

Yah, but where else can you go down the shore on a Saturday night, get a hummer in the bathroom, and see a Bon Jovi cover band? That has to be worth something!

yes please

[enlosandes]

Nice Ass to Mouth, is that from a "Guido Bar"?

[powder11]

Not yet, good buddy, not yet.

oh right, the sky is still falling

[meatdrink9]

No question we're in the shitter in many aspects, but also in prime investment territory for others. Getting a loan on an investment property has been an absolute bitch lately. Granted, I'm buying shit holes (but for dirt cheap). The bank always approves me for the amount of the loan, but then balks at the property I'm wanting to buy. I've purchased two new properties in the last month. On one I had to escrow $8,400 for repairs before the bank would lend. For the other the bank said they didn't think the home was worth the price I had it under contract for and left me hanging (the weirdest thing is I was buying the home from the bank I was borrowing from, we have a long relationship and I do most of my banking there). So I bought the home with my cash instead (that was parked in there bank). I've bought 7 homes this year and EVERY single one has been from a bank or defunct investment group.

The last two deals were bought at under $30 a square foot and should each have a positive cash flow of $400-$500 a month after remodel (more on cash owned properties obviously).

[enlosandes]

Way to get after it MeatDrink. Nice to read crisis equals opportunity!

[powder11]

No question we're in the shitter in many aspects, but also in prime investment territory for others. Getting a loan on an investment property has been an absolute bitch lately. Granted, I'm buying shit holes (but for dirt cheap). The bank always approves me for the amount of the loan, but then balks at the property I'm wanting to buy. I've purchased two new properties in the last month. On one I had to escrow $8,400 for repairs before the bank would lend. For the other the bank said they didn't think the home was worth the price I had it under contract for and left me hanging (the weirdest thing is I was buying the home from the bank I was borrowing from, we have a long relationship and I do most of my banking there). So I bought the home with my cash instead (that was parked in there bank). I've bought 7 homes this year and EVERY single one has been from a bank or defunct investment group.

The last two deals were bought at under $30 a square foot and should each have a positive cash flow of $400-$500 a month after remodel (more on cash owned properties obviously).

you should get an episode on Flip That House

[rideit]

I attribute all of MD's success to mad, raging, puss-filled gonorrhea.

[comish]

No question we're in the shitter in many aspects, but also in prime investment territory for others. Getting a loan on an investment property has been an absolute bitch lately.

positive cash flow of $400-$500 a month after remodel (more on cash owned properties obviously).

Getting any kind of loan for Real Estate is exceedingly difficult now. I work for an apartment company that has a long track record (20+) years, and significant relationships with many banks and getting construction loans is difficult and land loans nearly impossible.

When you say cash flow positive of $400 - $500, with what kind of leverage? Do you take typically take a loan to purchase the property and then refinance into a different loan once its fixed up, or is it one loan from the start? You financing the improvements out of cash?

[meatdrink9]

you should get an episode on Flip That House

I'm not flipping though. The market is shit for flipping. I doubt I'll ever do a straight flip again (maybe). Buyers are afraid and your potential buyers are going to have a harder time getting a loan. It's a buyers market so as someone trying to sell a flip you have no negotiating power. Plus, if you flip within a year you have short term cap gains taxes and in an up-and-coming area you'd be shorting your investment tremendously to sell right now. I'd do the same amount of remodel work to flip it or rent it, but by selling it now I bet I'd make 1/4th of what I will later if I'm patient.

But, as a buyer/investor/landlord doing what I'm doing it's like the perfect storm. Interest rates are crazy low (great for cash flow). There are tons of deals on bank owned properties. It is a buyer's market. You're in the driver's seat when it comes time to negotiate. Less buyers can qualify meaning more people need rentals (my product). Plus it's a bonus for the community. I take the beat-up, vacant, bank owned properties and turn them into the nicest homes on the block. Then provide affordable housing that is actually pretty damn pimp (other than the location isn't the greatest, yet) hardwood floors, stone counters, stainless appliances etc... (no linoleum, carpet or formica).

I get a lot of satisfaction from the the work. It does keep me up at night. There's a ton of thinking involved, but you learn with every single house. I totally fell into this by accident when I couldn't sell my first house when moving out of state for a job. We ended up keeping it and renting it. It may be the best thing we've ever done financially (by accident). The proceeds from that house (which we sold this year, after owning it 8 years) have already bought us 5 more rentals and will probably end up getting us 10 when all is said and done.

[Tippster]

Fucking Slumlord....

I'm thinking you & my wife should do some shoptalkin', J. Her site is www.grossmuellers.com.

[meatdrink9]

When you say cash flow positive of $400 - $500, with what kind of leverage? Do you take typically take a loan to purchase the property and then refinance into a different loan once its fixed up, or is it one loan from the start? You financing the improvements out of cash?

Most homes I buy are in the 55-65K range. I finance maybe 50K of that (always put 20% down). With Principal, Interest, Tax and Insurance my payment is usually right at $400 a month. I typically rent a 3/2 home for about $800 a month.

I make the improvements with my own cash. I get that cash through graphic design, previously sold properties, and Realtor commissions (I get money back each time I buy). I don't refinance homes I financed at the start (giving away too much money in closing costs). If I bought a property with cash due to a bank owned scenario that required it or a bank wouldn't lend on the beat-up property I will then refinance that property 6 months from the date of purchase so the refinance will be based on the appraised value rather than the cost of acquisition.

In October I bought 2 homes on one lot for 54K. I will be refinancing that deal in April. After the remodel I'm into the property for 63K. Between the two houses I collect $1,000 a month in rent. If I refinance for 65K I'll still be cash positive $500 a month and I'll have all of my money back to move onto the next projects. It's like I got the houses for free (other than my remodel time) and still get $500 a month from it.

You've got to have some financial stability (investment money, most from real estate sales, 1 flip, and our first house) to play the game the way I am now, but I can't see a time where I NEED to sell a property anytime in the near future. I would maybe like to sell and upgrade our home at some point, but the investments/rentals are there for the long haul and the plan is to just keep stacking them.

[meatdrink9]

Fucking Slumlord....

I'm thinking you & my wife should do some shoptalkin', J. Her site is www.grossmuellers.com.

Really nice work on there. We've got the Emeco chairs in our kitchen as well. It wouldn't pay to sink too much money into the location I'm currently working in right now. I'll upload a few pics I post on craigslist to show the rentals. They look really nice and are, but by doing most of the work myself the remodels don't cost much.

Here's a copy of the logo I use. It basically sums up what I'm doing, real estate recycling. Also makes you seem more professional and get more honest vendor bids to have business cards and all that stuff.



Here are some pics of my 60K "slums":

Bathroom I built from scratch in an unfinished attic:


The finished attic space (bamboo floors, dusty as this pic was during the build out):


The front room of one the two houses on one lot deal:


Kitchen from one of the two houses on one lot project:


Part of the kitchen from another property:

[Planet of the Shapes]

^^^^^^^^^^^^^^^Remodel Stoke!!!

Hells yeah. Sweet work and business. Thanks for putting out some different scenarios.

I see some faux could that be some plaster finish on the attic pic? bathroom, great room ? Looks good.

Your slums are sick.

Your a realtor too?

Great to see some perspective on it here out intermtn west. This area of Ut,Id,Wyo,Nev,Mt, the nice areas of these states will continue to grow as more people discover how its just as nice as some spots that are more discovered. Just less crowded. This forum is a ski based forum and the best skiing/lifestyle hype is in the west. Buts it always L.A. this or Wisconsin that or New Jersey that. The whole location thing. Broadbrushin dont work.

My wife hopefully will get on the books with some real earnings and we gots upward near $75' 000 in a low market equity and I too shall be shopping.
I look at both my properties with attitude of affordability of payments and can I live with decision. I am not busting my ass to pay for a house i cant afford.

But were probably all doomed and everyone will be sellin apples. If were lucky.

[grapedrink]

I'm not flipping though. The market is shit for flipping. I doubt I'll ever do a straight flip again (maybe). Buyers are afraid and your potential buyers are going to have a harder time getting a loan. It's a buyers market so as someone trying to sell a flip you have no negotiating power. Plus, if you flip within a year you have short term cap gains taxes and in an up-and-coming area you'd be shorting your investment tremendously to sell right now. I'd do the same amount of remodel work to flip it or rent it, but by selling it now I bet I'd make 1/4th of what I will later if I'm patient.

But, as a buyer/investor/landlord doing what I'm doing it's like the perfect storm. Interest rates are crazy low (great for cash flow). There are tons of deals on bank owned properties. It is a buyer's market. You're in the driver's seat when it comes time to negotiate. Less buyers can qualify meaning more people need rentals (my product). Plus it's a bonus for the community. I take the beat-up, vacant, bank owned properties and turn them into the nicest homes on the block. Then provide affordable housing that is actually pretty damn pimp (other than the location isn't the greatest, yet) hardwood floors, stone counters, stainless appliances etc... (no linoleum, carpet or formica).

I get a lot of satisfaction from the the work. It does keep me up at night. There's a ton of thinking involved, but you learn with every single house. I totally fell into this by accident when I couldn't sell my first house when moving out of state for a job. We ended up keeping it and renting it. It may be the best thing we've ever done financially (by accident). The proceeds from that house (which we sold this year, after owning it 8 years) have already bought us 5 more rentals and will probably end up getting us 10 when all is said and done.

very impressive but where exactly do you live that you're able to buy 3/2 houses for $55,000?? that people are willing to pay $500 to rent much less $1,000? you sir have hit the jackpot, most people are lucky to cover their mortgage on a rental property, you're getting a 150% return.. thats nuts.

[enlosandes]

Meatdrink, could you divulge where you are doing the recycling?

[meatdrink9]

grapedrink & enlosandes, the location is downtown Ogden, Utah. Do a search online on any public MLS. There are over 160 homes for sale under 100K right now. Another main reason for the hold strategy is the all the positives that are happening with Ogden. It's quickly becoming a ski industry town.

Amer sports (Salomon, Atomic, Sunnto, etc...) just moved their HQ there. The entire city is getting money pumped in like crazy. DNA, Goode, and others are also HQ'd here. I've been buying near the Salomon Center, historic 25th street (restaurants, art galleries, bars), and the river development.

Commuter rail will be connected to the city by this fall and the freeway improvements (legacy highway north out of SLC) should be done as well. The train and freeway improvements will make it easy for SLC commuters and Ogden is the last cheap space along the Wasatch. It's also just 20-30 minutes from some damn fine skiing (I know a couple of mags who can ski to their house and they paid under 150K). It is pretty scary in places still, but I think it's going to change. I've seen a lot of changes just in the year I've been investing. The worst houses always get bought up by people like myself.

There are still rumors of a west side ski resort (city gondola is dead in the water though). If the resort did come about and they connected it with a trolley (the gondola opposition's idea). Ogden would have the first ski-in ski-out University in the country (Weber State, you could run laps between classes). With commuter rail you could also go directly from the airport to lifts all on mass transit (train, trolley, gondola). A lot of this stuff is still speculation, but even if it doesn't become a resort town and just catches up to the rest of the Wasatch life will be very good.

It is good to be on site if you're investing though. It's still a tough town and the reason I'm able to make a lot of my projects work is that I can be there working on them. It is possible to buy homes already fixed up for around $50 a square foot (post flips, flippers think their doing well pulling 20-30K per property). But obviously your rental cash flow won't be as good and you're playing more of a speculation game at that point.