Ask tommy2 about Real Estate

[chopstick]

Tommy -

What are your thoughts on how the jump in sub-prime ARM resets starting in June will affect property values? How long or what kind of lag time do you think there will be? 60-90 days?

Do you have any sites that you read regularly which you could recommend to people interested in this? I read a number of housing bubble/crash weblogs that track news sites and industry releases, and am always looking for more.

If the federal government decides on a bailout, how do you think that is most likely to play out? Just handing out money and punting the bill to future taxpayers?

Financial strategies to leverage the current situation - considering that the short-the-builders and the short-the-subprime-lenders boats have already left the dock, are there any good boats still around to catch a ride on?

Thank you for taking the time to answer our questions.

[tommy2]

[ QUOTE ]
Tommy -

What are your thoughts on how the jump in sub-prime ARM resets starting in June will affect property values? How long or what kind of lag time do you think there will be? 60-90 days?

Do you have any sites that you read regularly which you could recommend to people interested in this? I read a number of housing bubble/crash weblogs that track news sites and industry releases, and am always looking for more.

If the federal government decides on a bailout, how do you think that is most likely to play out? Just handing out money and punting the bill to future taxpayers?

Financial strategies to leverage the current situation - considering that the short-the-builders and the short-the-subprime-lenders boats have already left the dock, are there any good boats still around to catch a ride on?

Thank you for taking the time to answer our questions.

[/ QUOTE ]

I should remind everybody that I am a commercial /development redevelopment guy. Some of the macro issues that affect commercial property affect residential property and vice versa...and some don't. That being said, I don't spend a ton of time watching the housing market--I spend my time trying to buy, redevelop and sell strip malls, office buildings, industrial properties and some apartment complexes.

Ok, so that being said, all the signs that I see/read/hear about are that things are about to get worse. I feel like we are standing on the edge of a cliff right now and the ARM resets, the high debt levels and the falling confidence level are gonna converge in a real bad way.

How to leverage this--keep your powder dry and don't try to find the absolute bottom. Once this isn't on the front page every day I'd jump in and start buying--in fact, I will. Buy in locations that have always been good/strong, but are beat down by the general market condidtions.

[jalapenoguy]

tommy- do you know of any decent websites for learning more about real estate? seems like all i can find are articles by people trying to rope the sheep into their seminars. looking for stuff specifically on rental property.

[Statutory]

I live in Iowa City. I am going to be there for the next two years. I am very interested in buying a house, living in it and rent rooms to friends and hopefully keep the place as a rental after I leave. I am 90% sure of where I will work after school, and that is 2.5 hours away.

All this wait until we see the bottom of the market talk makes me leery of buying now. One of my big motivators, however, is I would like to live in a house instead of an apartment for the next couple years. So if I am going to buy, I need to buy soon.

Should I just scrap the idea?

[Karmic]

Tommy, how badly if at all, would a Government Bailout hurt those of us who have waited to purchase a house because we hoped for this scenario? I'm in SoCal and was unwilling to buy what I believed to be an overpriced house on an ARM. However, with the recent ballot measure passed to help low income people get housing loans (which of course is insane, the income level you need to be at to qualify is significantly lower than mine, and I still don't belive mine is enough in this market) if there were a government bailout of the subprimes would that keep house prices high here?

[tommy2]

[ QUOTE ]
tommy- do you know of any decent websites for learning more about real estate? seems like all i can find are articles by people trying to rope the sheep into their seminars. looking for stuff specifically on rental property.

[/ QUOTE ]

Honestly, no. There are plenty of sites (Loopnet, GlobeSt.com, Dismal.com) which are related, but none are good at explaining how you get from a to d. I have thought about starting one, but lack the technical website expertise. Anybody want to partner up?

[tommy2]

[ QUOTE ]
I live in Iowa City. I am going to be there for the next two years. I am very interested in buying a house, living in it and rent rooms to friends and hopefully keep the place as a rental after I leave. I am 90% sure of where I will work after school, and that is 2.5 hours away.

All this wait until we see the bottom of the market talk makes me leery of buying now. One of my big motivators, however, is I would like to live in a house instead of an apartment for the next couple years. So if I am going to buy, I need to buy soon.

Should I just scrap the idea?

[/ QUOTE ]

I don't see a huge problem with this strategy. Trying to time the bottom is futile and everybody is guessing anyway. If your hold period is longish 7-10 years then you should be fine. I'd wait til July and then jump in.

[tommy2]

[ QUOTE ]
Tommy, how badly if at all, would a Government Bailout hurt those of us who have waited to purchase a house because we hoped for this scenario? I'm in SoCal and was unwilling to buy what I believed to be an overpriced house on an ARM. However, with the recent ballot measure passed to help low income people get housing loans (which of course is insane, the income level you need to be at to qualify is significantly lower than mine, and I still don't belive mine is enough in this market) if there were a government bailout of the subprimes would that keep house prices high here?

[/ QUOTE ]

It will certainly soften the blow and reduce the liklihood of the "hard crash" scenario. It depends on how fast Congress acts. If they wait much longer it will be moot anyway. Frankly, I fully expect them to do something.

[MuckerFish]

Tommy-
Lots of people asking about individual RE, but any ideas about commercial, since that's what you do? There's an area nearby to me that seems prime for expansion with some available land, but I'm a commercial noob. I figure with the downward market forces it might be a good time to get in "on the cheap", but I'm sure I'm likely wrong since none of the pro's have done anything with the area I'm considering.

How could I get experience with small commercial projects? Is it possible to do significant commercial development as a part-timer? Can someone do a strip-mall type project from scratch? Any way of approaching established developers to partner with?

Thanks!

[tommy2]

[ QUOTE ]
Tommy-
Lots of people asking about individual RE, but any ideas about commercial, since that's what you do? There's an area nearby to me that seems prime for expansion with some available land, but I'm a commercial noob. I figure with the downward market forces it might be a good time to get in "on the cheap", but I'm sure I'm likely wrong since none of the pro's have done anything with the area I'm considering.

How could I get experience with small commercial projects? Is it possible to do significant commercial development as a part-timer? Can someone do a strip-mall type project from scratch? Any way of approaching established developers to partner with?

Thanks!

[/ QUOTE ]

Ground up development is the toughest game. Especially infill, small project stuff. Much, much easier to start in the redevelopment game. Look for a strip mall (smallish), office building, etc. that is well located, but generally not well taken care of. Light industrial buildings (warehousing, assembly, etc) are good too.

Part-time is tough for development work. I have been involved in 4 ground up projects ranging from $1m to $20m and they are a full time job every time.

Remember, with redevelopment, somebody is paying you while you fix up the building. With development, the clock is ticking and there are always (always!) unforseen delays and expenses.