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Re: Real Estate as Investment
Old 03-26-2005, 07:10 AM   #21
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Re: Real Estate as Investment

Anyone know of good real-estate books that cover subtleties and variations between States?

i.e. Is California the only state with little or no property tax?


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Re: Real Estate as Investment
Old 03-31-2005, 05:39 AM   #22
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Re: Real Estate as Investment

For all those who think RE prices can't go down ... I'll post my "tale"

I bought 9 units north of Boston at the exact wrong time (late 80's) and slowly watched them flip upside down thru the early 90's. Oweing more the property was worth was half the problem ... rents also plumeted because new owners bought for less than than thier neighbor. My once 200/mo positive cash flow turned into a 5-6 hundred/month negative.

Banks - taking a beating - stopped lending to investors. RTC auctions flooded the market, selling RE at a dime on the dollar. Having seen the "top", I knew this was the "bottom" so I begged/borrowed from relatives and attended RTC auctions. When the RTC autions dried up I went to banks for REOs. In all I bought another 14 units. Most I paid was 32k ... least was 5k.

In the end it took 12 years for my original 9 units to turn right-side-up. Even still, I wrote checks as a seller at 3 of my first 4 closings. The other 14 units did extrodinarily well (still carrying many of these).

Couple lessons from all this: 1) don't let the mortgage consume more than 50% of the rents 2) don't be afraid to take some profits off the table.
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Re: Real Estate as Investment
Old 03-31-2005, 05:58 AM   #23
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Re: Real Estate as Investment

Interesting story tryan! Guess there is just no sure thing

I was trying to think of my worst real estate deal ever.
I never had a real disaster, but I was a very fussy buyer.
Mainly I had to buy so cheap that hardly anything could
really cause sleepless nights. Takes a lot of legwork to find those deals, but I digress...................

I would say my worst deal was a personal residence I bought in 1980. It was new and I paid too much just because
we really liked it and I got easy builder fiancing. Then,
we decided to move after 2 years. Prices had declined
to the extent that I was upside down. Rather than
write a check to the buyer, I just stopped making my payments on the land contract. After a few months with no cash flow the contract holder was more than ready to cut a deal.

JG




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Re: Real Estate as Investment
Old 03-31-2005, 06:16 AM   #24
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Re: Real Estate as Investment

JG -

Buy so low there isn't much risk....ahh the old margin of safety rule. Ben Graham 101 applied to real estate.
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Re: Real Estate as Investment
Old 03-31-2005, 06:57 AM   #25
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Re: Real Estate as Investment

Rather than
write a check to the buyer, I just stopped making my payments on the land contract. After a few months with no cash flow the contract holder was more than ready to cut a deal.


Nice move! I tried this game of chicken with one bank ... stopped making mortgage payments for 3 months and tried to "negotiate" better terms. They trashed my credit, then I paid in full. Guess I blinked first! Would have been easier with a private note holder. Live n'learn!
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Re: Real Estate as Investment
Old 03-31-2005, 07:07 AM   #26
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Re: Real Estate as Investment

Quote:
Would have been easier with a private note holder. *Live n'learn!
Maybe not...sold a property via owner financing toooo early. Assessed value has since tripled. If buyer didn't make payments (which he does), think I would happily look into the foreclosure process.
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Re: Real Estate as Investment
Old 03-31-2005, 08:06 AM   #27
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Re: Real Estate as Investment

I sold several properties on land contract
(seller financing). In many of those, I sold hoping that
the buyer would default and I could then take the property back. None ever did.

JG
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Re: Real Estate as Investment
Old 03-31-2005, 10:11 AM   #28
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Re: Real Estate as Investment

Maybe not...sold a property via owner financing toooo early. Assessed value has since tripled.

Been there too ... carried the note - first position - for a young family. They made 7 years of on time payments. Then re-fi'd to lower the rate and pulled ~100k out of the property. Bought another - larger - house and rent out the smaller one. Can't decide if I am a saint or sucker.
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Re: Real Estate as Investment
Old 05-02-2005, 09:35 PM   #29
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Re: Real Estate as Investment

From the "Holy Cow" department...

My $250k home purchased two years ago was recently valued at around $350. Last week a house 5 up from mine sold for $394k.

I may try selling this, setting up a cardboard box by the side of the road to live in, wait a couple of weeks and see what I can get for the box...
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Re: Real Estate as Investment
Old 05-03-2005, 02:03 AM   #30
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Re: Real Estate as Investment

What are the rents like in your neighborhood? Around here there's a nice place on the market for 1,350,000, a similiar home is renting for $2500/month. I'm renting for now (for a lot less than $2500/mo).
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Re: Real Estate as Investment
Old 05-03-2005, 05:47 AM   #31
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Re: Real Estate as Investment

I was not sure if this question was directed to someone specific or just generally. Anyway, just briefly............in 1998 I rented a large 2 bedroom
apartment in a small rural town for $330 a month. Talked landlord into all new paint and carpet before I moved in. The neighbors were not
"country club" types, but a good deal. In less than a year I rented
a 600 SF efficiency right on the water (same river we live on now) large
deck
and detached garage for $425 a mo. The house we are in
(100 feet of water frontage/1100 SF) would rent for about $600.

The average apartment in the local papers is in the $400-500
range. You can rent a real nice house here for $700-800.
Anyway, another advantage of living out in the hinterlands.

JG
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Re: Real Estate as Investment
Old 05-03-2005, 06:48 AM   #32
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Re: Real Estate as Investment

We are deep into real estate investment...all unplanned.

Our residence in NY is appreciating nicely as commuter transportation to NYC improves. est. $400k

Our NC townhouse-by-the-sea has rocketed off the charts in the last 3 years and is approaching "name your own priceville". est $500-600k this week

Recently inhered a 900sqft 3br home on an acre. All fixed up and ready for sale. est 300k Not so fast says DW...Lets put the kids in there Our daughter is getting married this month and the plan is for them to pay all expenses (about 600/mo). They now pay 1200/mo living together. The idea is for them to save enough in a year or two for a down payment on a bigger house anywhere they choose.

No mortgages. Total cost basis $380k Now I know this is a nice problem to have but as they say...you can't eat real estate. We have an opportunity to pick up a new house in FL at a good price. I'm not the landlord type and DW is an "accmulator". She is not ready to sell anything. "You never know when grandchildren..." :

Like it or not we have to start thinking as real estate investors not multi-home owners. This is becoming full time employment.
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Re: Real Estate as Investment
Old 05-03-2005, 06:55 AM   #33
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Re: Real Estate as Investment

Hello BUM. I am envious of your RE activity and success. I can't
hack it anymore, but the urge won't die. On Saturday I went to a farm auction just in case they wanted to "give it away". I was prepared to buy in that case. Luckily it sold at a "fair" price
(meaning way too high for me). Yesterday I noticed a waterfront
lot in our subdivision for sale and I called just out of curiosity.
So far this is a harmless passtime as I rarely buy anything.
I am always happy after I pass up these deals, but when the'next one pops up, I can't resist the urge to check it out.
It's like an old man still noticing an attractive female, long after
the ability to follow up is long gone

JG
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Re: Real Estate as Investment
Old 05-03-2005, 09:19 AM   #34
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Re: Real Estate as Investment

Quote:
What are the rents like in your neighborhood? Around here there's a nice place on the market for 1,350,000, a similiar home is renting for $2500/month. I'm renting for now (for a lot less than $2500/mo).
Rents are definately a drag on home prices. Selling a small inner-city SF at $180k that might fetch $1100/mo rent. Tried $1200/mo with the last tenant but they couldn't cut it (left in Feb). Tenants simply refuse to play along in the RE price mania.

This creates an interesting dilema, why would an owner accept 4-3%/yr on their investment (annual net rents vs. current price) AND have to "work" to get it. Especially if one believes prices are peaking. If you believe prices have more room to run ... no-brainer, hang-on. Decisions, decisions...

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Re: Real Estate as Investment
Old 05-03-2005, 11:10 AM   #35
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Re: Real Estate as Investment

Quote:
Originally Posted by BUM

Our NC townhouse-by-the-sea has rocketed off the charts in the last 3 years and is approaching "name your own priceville". est $500-600k this week
Hi Bum!
I know that's the truth. We sold one side of our duplex in Emerald Isle, NC in May, 2003 for $525K, we sold the other side in Oct 04 for $780K, now they are asking $950K! :P

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Re: Real Estate as Investment
Old 05-03-2005, 11:37 AM   #36
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Re: Real Estate as Investment

Its even better here. The disparity is ridiculous. I saw a 10 acre property with a 2000 square foot house on it, lake view, nice quiet area about a 5 minute drive from a major road that has all the shopping you can name...$1800 a month. I might get $1200 a month, maybe $1300 renting out this place.

Now you know why I sold my wifes old house...$240k for sale, $1000 a month tops to rent. The math just isnt in the favor of being a landlord vs dumping at these prices.

I'm sorely, sorely tempted to sell and move into a rental. Unfortunately this is the perfect place to raise a kid (8 home cul de sac filled with little kids and great neighbors) and I'm very very sick of moving furniture.
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Re: Real Estate as Investment
Old 05-03-2005, 01:36 PM   #37
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Re: Real Estate as Investment

I like real estate, especially the kind that makes money. Many years back I took a trip out to Colorado. I saw opportunity with the way the state is structured. The mountains block a large portion of the state and I knew the growing population would force development right along the base of the mountains. I bought land north and south of Denver and made out nicely.
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Re: Real Estate as Investment
Old 05-03-2005, 01:46 PM   #38
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Re: Real Estate as Investment

I do not understand the California rental market. If you only are getting a return of 3-4%, not counting your own labor, why in the world is anyone in the landlord business? Especially renting single family homes that could be sold for big bucks. Sure looks like a bubble to me.

In Arizona where we have most of our real estate interests, many apartment owners are converting their buildings to condos as the value is so much higher. I am hoping two buildings we have interests in are converted and all sold out before interest rates increase.

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Re: Real Estate as Investment
Old 05-03-2005, 02:16 PM   #39
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Re: Real Estate as Investment

Real estate speculation at it's finest! Picked up a copy of the sunday fishwrap last week (San Diego Union Tribune). They had an interesting article about the discrepancy between the high home values vs. the low rent levels, and that as the gap continued to widen the market looked more like a bubble. After the obligatory quotes from Proffessor Sourpuss ("Yes this is a bubble, we're all doomed!") and the President of the local real estate board ("No bubble, everything is just peachy! To the moon! Can I plug my business now?") the article ended with a theory that as people watched values rise so fast in San Diego, even people out of town looked to buy and ride the appreciation wave up, further driving up demand for purchases and accelerating the home value increases. BUT in turn, since they didn't live there, they wanted to rent out the place to mitigate mortgage cost, so rental supply became flooded i.e. rent barely outpacing inflation. Thus the widening gap and low margin.
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Re: Real Estate as Investment
Old 05-03-2005, 03:34 PM   #40
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Re: Real Estate as Investment

I got a call today from a socall investor interested in my 2 fam. They offered $800k to start with. Of course, I would have to sell within 1 to 3 months. 3 houses down, a house was sold last year for $575k which was gutted and extended and is still being worked on. That probably added another $200K easy.
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