Re: Real estate newbie
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Wrong. I have done very very very well out of real estate inthe last 5 years. I just realise that now there are much better ways to invest my money. Get out at the top and in at the bottom.
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I stand corrected, and I'm glad to hear that you made money recently investing in RE. Thats great. I like your idea about getting out of RE at the top and in at the bottom. Indeed, that is the exact point that I was trying to make. The problem is that in RE we never really know where those tops and bottoms are. I say you should take the great deals as the come, not pass them up on the hopes of maybe getting a little better deal tomorrow. A bird in the hand, and all that...
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So as RE appreciated over 120% in the last 5 years you were going:
"These yearly massive capital gains are so meh, give me negative YOY growth any time, then Ill make a killing."
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No, I was saying, "Goddam, how did my properties get so valuable? I guess its time to sell them off." And that is what i've been dooing for the last two years. Now I'm back to buying and I've been doing pretty good at it of late.
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You talk about making an income, well I cant debate with you there, as I am in the UK. Here rental yeild is bellow what I can get just by putting my money in a standard current account.
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Obviously rental yields dependon your market. I'm only innterested in outstanding deals, so my returns are 25%+ on cash invested, and 10% plus cap rates. These returns are adequate for me.
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As for finding motivated sellars, that is all well and good, but is meaningless when there are no motivated buyers. Without motivated buyers and falling prices, the nightmare of negative equity become more real, however much you managed to discount your purchase by.
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Sure, theoretically there is unlimited downside to any investment. For a long term buy and hold RE strategy, the short term market fluctuations maybe don't make such a huge difference. For a short term strategy, all you have to do is price the projected market decreases into your offers. Another thing that you could do is try out a strategy that works in down markets - such as lease options.
Besides, in the subdivsion that I'm developing I haven't had any shortage of buyers at all. In fact, I've got a waiting list right now of people that are excited for me to finish some homes for them. So I'm not really feeling the pinch. But I make it real easy for people to buy from me because I carry my own paper. The point here is that there are a million ways to invest in RE. Believe it or not, some ways of investing in RE work really good in down markets.
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Prices will fall for at least 3-4 years. The reasons are crystal clear.
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Not where i live. Subprime hasnt' hurt my local market hardly at all. Fall and winter are always slow here. Meh, not impressed.
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