crazy real estate market
- Thread starter semtex
- Start date
tryan - that's a valid point... I guess "cash flow positive" HAS been kind of redefined to mean "no loss". However, the units I like are in well-built brick buildings with very few maintenance issues. I have owned a few of these units for going on 8 years now and have had pretty much zero issues. (In 8 years, each unit has been vacant for a total of about 3 months.) I will need to update the kitchen and bathroom at the 15 or 20 year mark, but everything else is part of the HOA. This unit is in Allston, which from my experience is a bit stronger of a rental market than Brighton. The play with these units is to wait for Harvard to come in and increase the population density. There are other metrics like - Boston University charges $500/mo per bed for dorm space, for poor conditions, which will increase to $600/mo soon. This helps set the rates for student rental properties. Student demand is so tight all the time that if you price a unit appropriately, it will be gone in a day or two. And I agree, many landlords would not be comfortable with student rentals. Being a recent student and resident of the area, I have a high comfort level. I have had students trash units before but the cost never exceeded the security deposit so it worked out in the end. Most of the time I try to rent to Harvard, MIT, BU or BC students and it's typical for the parents to co-sign. When someone is paying $40k/year to go to school I don't worry too much about them covering their $600/mo rent payment.
Compared to renting a parking spot, just getting out of bed in the morning is hard work.
I have a few of those are they are great.
I was in North Carolina and saw real "cash flow positive" units. 100k to buy a 3/2 SFH on a nice little plot of land. Rents for $1200/mo. In my mind, that is much more of a headache... harder to fill vacancies, deferred maintenance... I would be sitting there thinking "how long until the roof falls off?" and "how long until I have to repaint it?".
Compared to renting a parking spot, just getting out of bed in the morning is hard work.
I have a few of those are they are great.I was in North Carolina and saw real "cash flow positive" units. 100k to buy a 3/2 SFH on a nice little plot of land. Rents for $1200/mo. In my mind, that is much more of a headache... harder to fill vacancies, deferred maintenance... I would be sitting there thinking "how long until the roof falls off?" and "how long until I have to repaint it?".
cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Things are free-falling around here north of Sacramento, which IIRC was the most "overheated" market in a study done last year.
People were snapping up houses near where I live and commuting down to the city, until they drove prices from the high 100k to mid 250k up into the 400-500k range.
Developers built some huge subdivisions between sac and here and then buyers evaporated. Now the mid-commute properties are being sold for huge discounts. A nice new home 1/2 hour from work for $325 or go an hour away and look at stuff at the same prices...
I could have gotten $425 for my house 18 months ago...be lucky to get $325 for it right now.
Given the long rise in equities, i'm starting to think about yanking out a chunk and starting to do some bargain hunting for a fixer with a seller that has to go.
As far as pricing, I go with several metrics. I look at new construction cost to rebuild the home in question, plus landscaping and upgrades, then sub off some money for age/depreciation and stuff that needs replacing in the short term. If I can get close to that price, i'm getting a bargain. Once you've floored out on buying an existing established home for close to new construction cost (with adjustments) you dont have far to fall. The difference is what you're putting at risk and the quality of town, neighborhood, amenities and job opportunities is the premium. If that premium seems worth it, or theres upside in new companies/retailers/restaurants/parks/etc moving into the area...you've got a good basis.
I do look at zillow but their prices for individual properties is lame. But its probably a fair representation of average cost per home/lot square foot. What I've been using zillow for is to find the comparable sales in the region, then doing a drive-by to have a look at the homes, how they look, how the lot is laid out, and to see exactly how "comparable" it really is.
Another good pricing rule of thumb is to look at what a comparable house is renting for, factor in costs of ownership with renting in mind. If you can get cash flow out of that, you've got a good deal. If you can rent a home for 1/2 what it costs to buy, you're overpaying. Rents are pretty good about establishing a floor value as renters will start translating to homeowners when the numbers hit parity and homeowners will start dumping properties when they can make more selling than renting.
As far as negotiating...as soon as you're "in love" with a house you're screwed. I'll go through my valuation process and then put a fair offer on a home that suits my needs. I could care less what the asking price is. A few times I've "insulted" the seller, a few times i've been surprised.
Unless we're in the ballpark and based on circumstances, I rarely accept a counter or counter-the-counter. I thank them for their counter and go look for another week or two. If I dont find anything else that excites me, I often come back and offer slightly less than I did the first time.
Yes, slightly less.
If you have a motivated seller and few competing buyers, they panicked when you walked away and will sometimes jump on your new offer before you rabbit off again.
When the agent says "but thats less than you offered the last time!", the answer is "yes, but I felt my offer was reasonable based on my evaluation and I didnt want to pay more than that. When the seller didnt take the offer, I felt like I should look at other properties and that took time. My time is worth money."
The couple of times I did this, it worked. Seller hated me though. Obviously this doesnt work in a sellers market. In the current market in many regions where prices are falling and the bottom isnt obvious...could be some opportunities to play hard ball.
People were snapping up houses near where I live and commuting down to the city, until they drove prices from the high 100k to mid 250k up into the 400-500k range.
Developers built some huge subdivisions between sac and here and then buyers evaporated. Now the mid-commute properties are being sold for huge discounts. A nice new home 1/2 hour from work for $325 or go an hour away and look at stuff at the same prices...
I could have gotten $425 for my house 18 months ago...be lucky to get $325 for it right now.
Given the long rise in equities, i'm starting to think about yanking out a chunk and starting to do some bargain hunting for a fixer with a seller that has to go.
As far as pricing, I go with several metrics. I look at new construction cost to rebuild the home in question, plus landscaping and upgrades, then sub off some money for age/depreciation and stuff that needs replacing in the short term. If I can get close to that price, i'm getting a bargain. Once you've floored out on buying an existing established home for close to new construction cost (with adjustments) you dont have far to fall. The difference is what you're putting at risk and the quality of town, neighborhood, amenities and job opportunities is the premium. If that premium seems worth it, or theres upside in new companies/retailers/restaurants/parks/etc moving into the area...you've got a good basis.
I do look at zillow but their prices for individual properties is lame. But its probably a fair representation of average cost per home/lot square foot. What I've been using zillow for is to find the comparable sales in the region, then doing a drive-by to have a look at the homes, how they look, how the lot is laid out, and to see exactly how "comparable" it really is.
Another good pricing rule of thumb is to look at what a comparable house is renting for, factor in costs of ownership with renting in mind. If you can get cash flow out of that, you've got a good deal. If you can rent a home for 1/2 what it costs to buy, you're overpaying. Rents are pretty good about establishing a floor value as renters will start translating to homeowners when the numbers hit parity and homeowners will start dumping properties when they can make more selling than renting.
As far as negotiating...as soon as you're "in love" with a house you're screwed. I'll go through my valuation process and then put a fair offer on a home that suits my needs. I could care less what the asking price is. A few times I've "insulted" the seller, a few times i've been surprised.
Unless we're in the ballpark and based on circumstances, I rarely accept a counter or counter-the-counter. I thank them for their counter and go look for another week or two. If I dont find anything else that excites me, I often come back and offer slightly less than I did the first time.
Yes, slightly less.
If you have a motivated seller and few competing buyers, they panicked when you walked away and will sometimes jump on your new offer before you rabbit off again.
When the agent says "but thats less than you offered the last time!", the answer is "yes, but I felt my offer was reasonable based on my evaluation and I didnt want to pay more than that. When the seller didnt take the offer, I felt like I should look at other properties and that took time. My time is worth money."
The couple of times I did this, it worked. Seller hated me though. Obviously this doesnt work in a sellers market. In the current market in many regions where prices are falling and the bottom isnt obvious...could be some opportunities to play hard ball.
macdaddy said:
Yep. There's a 4 BR house a block up the street from me for sale at ~$132.5k from the bank. That's $833/month mortage+insurance+taxes w/ 20% down and a 6.75% 30 year fixed. ~$100/month of that PITI is principal. Not sure what it would rent for, maybe $1150-1200/month. It may need a little work, probably a fresh coat of paint.
Here's the house for you playaz: http://www.realtor.com/Prop/1074489808
You're right about the maintenance with a SFH. It's always something.
(edited to change asking price and add link to property)
tryan
Thinks s/he gets paid by the post
- Joined
- Mar 25, 2005
- Messages
- 2,604
macdaddy - glad the student rental is working for you. I agree it's very stable in the Boston area. Always had the parents co-sign ... that's where the $$ was coming from.
Biggest "head-ache" was the complaints from the owner occupants who did not appreciate living in college housing. Something about all night parties when they were triing to get to work the next day ... or worst, let the baby sleep. Those were hard phone calls. Funny Brighton rental story . .. rented to Chris O'Donnell (aka Robin) before he hit big. Wasn't in the unit 2 months and he left to film Fried Green Tomato. Weeelll his roomate basically trashed the place. Parties every night ... lost a month cleaning that mess. Now if I could find the lease ....EBAY, maybe.
Yup, that's why places like Texas RE is going nowhere.
Biggest "head-ache" was the complaints from the owner occupants who did not appreciate living in college housing. Something about all night parties when they were triing to get to work the next day ... or worst, let the baby sleep. Those were hard phone calls. Funny Brighton rental story . .. rented to Chris O'Donnell (aka Robin) before he hit big. Wasn't in the unit 2 months and he left to film Fried Green Tomato. Weeelll his roomate basically trashed the place. Parties every night ... lost a month cleaning that mess. Now if I could find the lease ....EBAY, maybe.
Yup, that's why places like Texas RE is going nowhere.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
While they were installing more gold in my mouth this afternoon my dentist and his assistant were talking property. She had recently moved up from Alamo, CA which irrc is out near Pleasanton on the dry side of the Berkeley Hills. Don't know how close BART gets.
She said that in late 2005 her home appraised at $2.4; and that they sold it in December 06 for $1.3mm. This seems highly unlikely to me, the appraisal must have been phony. But who knows? She said it was a big high quality house. But that is almost a 50% haircut!
As far as I can tell, the Seattle market is still very strong. Maybe it will take layoffs at Microsoft to change it. OTOH, at some point I would think MS's positive stimulus should start to wane, because I don't know how much longer they could add headcount at the rates of recent years.
Anyone who sees signs of prices falling in Seattle please let me know.
BTW- you Boston guys- do you stay north of Huntington Avenue when you are hunting for rentals?
Ha
She said that in late 2005 her home appraised at $2.4; and that they sold it in December 06 for $1.3mm. This seems highly unlikely to me, the appraisal must have been phony. But who knows? She said it was a big high quality house. But that is almost a 50% haircut!
As far as I can tell, the Seattle market is still very strong. Maybe it will take layoffs at Microsoft to change it. OTOH, at some point I would think MS's positive stimulus should start to wane, because I don't know how much longer they could add headcount at the rates of recent years.
Anyone who sees signs of prices falling in Seattle please let me know.
BTW- you Boston guys- do you stay north of Huntington Avenue when you are hunting for rentals?
Ha
wabmester
Thinks s/he gets paid by the post
- Joined
- Dec 6, 2003
- Messages
- 4,459
HaHa said:Anyone who sees signs of prices falling in Seattle please let me know.
You're shopping for a downtown condo, aren't you? Some say there's already a condo glut, and they're still building more.
article
I think Microsofties drive the eastside market, so you might have a pretty good chance of catching a bargain downtown.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
wab said:
Thanks for the link Wab.
Ha
cute fuzzy bunny
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Ha - I think what you're seeing on the numbers is a real estate appraisal for maximum value at a peak time period designed to get someone to put their house up for sale vs actual sales price. I could realistically have gotten 425k for my house around the same time hers appraised at 2.4M, maybe 320-325k right now.
Yep, pretty good haircut but the stuff had grown so long it was dragging on the ground. A little trim to the knees isnt that unreasonable.
Pleasantons pretty nice but it can get hot; bart was run to it around ten years ago IIRC. You can take a blue train right into SF or change trains and get down to fremont.
Yep, pretty good haircut but the stuff had grown so long it was dragging on the ground. A little trim to the knees isnt that unreasonable.
Pleasantons pretty nice but it can get hot; bart was run to it around ten years ago IIRC. You can take a blue train right into SF or change trains and get down to fremont.
JustCurious
Thinks s/he gets paid by the post
- Joined
- Sep 20, 2006
- Messages
- 1,396
The housing correction is not over.
http://money.cnn.com/2007/02/05/real_estate/housing_vacancy.reut/index.htm?postversion=2007020512
http://money.cnn.com/2007/02/05/real_estate/housing_vacancy.reut/index.htm?postversion=2007020512
