Real Estate

[mangodance]

How many of you in real estate would start now? I'm nervous about starting given the huge bubble. I've watched the house in which I rent an apartment TRIPLE in actual sale price (2 sales) in the last 5 years. My own (new) landlords consist of a couple who are in a roughly 10-12-year cycle and plan to sell all to get out completely within another 6-7 years. I wouldn't mind some rentals but with the rental glut, and the high price of units, it gives me the willies. We don't own a home and would like to start by living in a building with multiple units. We looked at it the last time my house sold and were told by the few who do lend on rental units that they wouldn't lend on any property with over 4-units. Additionally, we were told that with the 7 units in this property we'd be looking at a commercial loan. I'll profess ignorance, but that would seem out of line with our hope to trickle into rental properties.

Can anyone suggest some decent references?

 

[cute fuzzy bunny]

Not in a million years.

I'd buy a primary residence, or sell and downgrade. I wouldnt try jumping on this bubble. But I've been wrong about real estate continuing to go from nosebleed to needing binoculars to see down to the nosebleed level...

 

[tryan]

the high price of units, it gives me the willies

...trust your gut and steer clear. Unless you can pay the mortgage with 1/2 the rents, you'll be subsidizing someone's housing.

Need to walk the unbeaten path: sell when everyone is buying; buy when everyone is selling. Today, everyone is buying ... time to sell.

 

[Beachbumz]

I don't know whether I would start now or not, but I know I wouldn't start now in the market I was in! I agree with Tryan, if it gives you the 'willies' then stay away.

Beachbumz 8)

 

[Whakamole]

Not in a million years.

I'd buy a primary residence, or sell and downgrade. I wouldnt try jumping on this bubble. But I've been wrong about real estate continuing to go from nosebleed to needing binoculars to see down to the nosebleed level...

Bubbles always pop. Sometimes they hold on for years, but they always pop.

I wonder how REITs will do when this collapses.

 

[Nords]

How many of you in real estate would start now? 
Can anyone suggest some decent references?

We've never stopped! But prices are way high right now and we're waiting for a disaster to bring prices down in the next decade or so. The key is staying informed enough while you're waiting so that you can recognize when prices are down.

Try these classics to see if the numbers in your area make any sense: Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions). Try this book to see if you're interested, even if the numbers make sense: Landlording by Leigh Robinson (7th edition or later).

Another long-term option would be to seek a residential property manager's job. Landlords would prefer someone on site who's reliable (knowledgable is an unexpected bonus). You'd certainly get a lot of experience along with your free rent, and you'd be the first to recognize a bargain coming on the market.

 

[73ss454]

Remember the NASDAQ!!!

 

[Martha]

With rental property, I would only buy if the property cash flows now. What are the rents? What kind of vacancy rate does the community have? Will the rents pay the mortage payments, all expenses, and have some left for you as a return on your down payment? Is there any defered maintenance that needs to be addressed immediately?

Hard to find properties in many markets today when people are willing to buy a property that does not cash flow based on their bet of future appreciation.

We used to be in the business but sold out as property values increased.

 

[Mr._johngalt]

We've never stopped!  But prices are way high right now and we're waiting for a disaster to bring prices down in the next decade or so.  The key is staying informed enough while you're waiting so that you can recognize when prices are down.

Try these classics to see if the numbers in your area make any sense:  Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions).  Try this book to see if you're interested, even if the numbers make sense:  Landlording by Leigh Robinson (7th edition or later).

Another long-term option would be to seek a residential property manager's job.  Landlords would prefer someone on site who's reliable (knowledgable is an unexpected bonus).  You'd certainly get a lot of experience along with your free rent, and you'd be the first to recognize a bargain coming on the market.

I could start today and make a fortune. Too old and too lazy. Ah,
if I only knew 30 years ago what I know now.

JG

 

[charlie]

Whak,

Some REITS, like those in apartments, might get hurt but
where are the people going to live who give up their homes?

I don't see other types of REITS being hurt worse than the
general market is hurt in an economic downturn.

I am no RE expert so take these comments with a dose of salt.

Cheers,

Charlie

 

[tryan]

Some REITS, like those in apartments, might get hurt

Read in the paper a couple weeks ago that a TIAA Cref fund bought +150 unit residential complex for ~$157k per unit. Article went on to say the average rent was $1000-1200/mo/unit.

Yup, someone's gonna be hurt here. Just like the top of the NASDAQ when all those tech funds kept pouring donations into stocks.... that's what they're chartered to do. So that's what they do .... no choice.

 

[tryan]

Here's a link to the TIAA Cref purchase (112 units not +150)

http://www.bostonsf.com/media/paper...le.Of.112Unit.Carlton.Oaks.In.Sa-954003.shtml

 

[Arif]

It depends greatly on your location. Here in GA I can find properties that will cashflow all day long. BUT there is no where near the appreciation folks in CA, MA, MD are experiencing. Personally I would only buy a property if it cashflows today! That keeps you out of hot water financing wise. From your post I assume that you are in one of those high cost areas. Would you consider moving to a low cost area? This would make a world of a difference in the properties you are able to afford and possibly use to parlay into an early retirement from the rents.