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  #31  
Old 11-24-2007, 09:08 PM
DesertCat DesertCat is offline
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Default Re: Real Estate people: I want to buy a house, advice?

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desertcat, link to fortune article plz?

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Finally I am using a real computer, here it is.
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  #32  
Old 11-24-2007, 09:33 PM
Thremp Thremp is offline
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Default Re: Real Estate people: I want to buy a house, advice?

FWIW I don't think spex or any of my RE friends are going to find themselves unemployed soon. Specific markets like the high end LV strip condo things might end up taking a bath for long periods, but I'd be more hesitant to thing housing prices are going to drop considerably for extended periods.
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  #33  
Old 11-25-2007, 12:51 AM
DesertCat DesertCat is offline
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Default Re: Real Estate people: I want to buy a house, advice?

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FWIW I don't think spex or any of my RE friends are going to find themselves unemployed soon. Specific markets like the high end LV strip condo things might end up taking a bath for long periods, but I'd be more hesitant to thing housing prices are going to drop considerably for extended periods.

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Are your friends investors or realtors? Realtors will make money regardless of the direction. There is a huge overhang of houses, in PHX unsold inventory has increased 150% over the last two years. They will eventually be sold, and I can't imagine any other scenario than fire-sale prices, but either way the realtors will get their commissions.

Investors are in a tougher boat. But regardless of macro conditions, if you make smart decisions, i.e. buy the few homes that will rent at positive cash flow, you'll probably do fine.
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  #34  
Old 11-25-2007, 01:55 AM
emon87 emon87 is offline
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Default Re: Real Estate people: I want to buy a house, advice?

It really sounds like you don't have any idea what buying houses entails. Also, you don't know where you want to live... And you're 22. Are you sure you're even responsible enough to care for your own place?

I would say renting is your best bet.
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  #35  
Old 11-25-2007, 01:57 AM
spex x spex x is offline
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Default Re: Real Estate people: I want to buy a house, advice?

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Investors are in a tougher boat. But regardless of macro conditions, if you make smart decisions, i.e. buy the few homes that will rent at positive cash flow, you'll probably do fine.

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In any market it is hard to find properties that you can get a decent cash flow from. Thats because you always have to buy for less than market value in order to make decent cash flow. I've pointed out numerous times on this board that just because a price is lower than it was a year ago, that doesn't mean that its a good deal as an investment. Its possible that in some markets prices will remain flat or decline for several more years. That is neither here not there necessarily. You can likely find as good of deals now as you will be able to in a few years, just maybe not as many.

As a professional RE investor, my opinion is what DesertCat alluded to above: you need to have multiple options for exiting from any property.
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  #36  
Old 11-25-2007, 03:36 AM
pig4bill pig4bill is offline
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Default Re: Real Estate people: I want to buy a house, advice?

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This part i'm not really understanding, if I were to lets say buy a house being foreclosed for $110k thats worth $180k and I live there for 2 years and I sell in 2 years for $180k because there was no appreciation then I would be profiting like $70k right?

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Desert Cat called it. You're not going to buy a house that's worth $180 for $110k. Do you think everyone in Austin is stupid, and would let that happen? There are a lot of people in that game that are tied in better than you, and would be in there ahead of you.

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Even if a house didn't appreciate and you can't get a good deal on it... wouldn't it just be, you buy it for $120k, you live there for 2 years, you sell for $120k and pretty much break even vs paying rent for 2 years? Or I guess the fees TC mentioned along with:

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Closing costs to sell are going to be 10-15%. That's 18 grand IF it doesn't go down in value.

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A friend of mine I was just talking to says that one of the worst declines in property value in housing markets has been like 3%, so even if you were to buy a $120k house and take a 3% loss, thats $3600 loss in value, but wouldn't that still be cheaper than the amount of money you'd pay in renting? Also, thats a "worst" case scenario... so don't you just save money as opposed to renting, while giving your self a possible chance that it might even go up within 2 years? Seems like a free roll in that sense?

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Find friends that know something about real estate, or stop listening to them. California has gone through 20% drawdowns multiple times. Many areas are down over 20% in this latest drawdown, with more to come.

But if you MUST buy a house now, look for real-estate owned. That is real estate that a bank or mortgage company is holding after they've foreclosed. For example, Countrywide has an 1800 sq ft house in Austin they are selling for $83,900.
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  #37  
Old 11-25-2007, 06:10 AM
Python49 Python49 is offline
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Default Re: Real Estate people: I want to buy a house, advice?

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It really sounds like you don't have any idea what buying houses entails. Also, you don't know where you want to live... And you're 22. Are you sure you're even responsible enough to care for your own place?

I would say renting is your best bet.


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As mentioned in my OP, I haven't begun any serious research on the subject and was just starting here so I could get some discussion going on it and go from there. I would never make any serious decisions without feeling confident I knew what I was doing. Definitely got something out of the thread though.
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  #38  
Old 11-26-2007, 10:57 AM
spex x spex x is offline
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Default Re: Real Estate people: I want to buy a house, advice?

[ QUOTE ]
This part i'm not really understanding, if I were to lets say buy a house being foreclosed for $110k thats worth $180k and I live there for 2 years and I sell in 2 years for $180k because there was no appreciation then I would be profiting like $70k right? Maybe more if I fix the place up some. I would also have a place to live basically while making money.. whereas if I rent that same house I could just end up paying $700 a month for 2 years and have a net loss of $700 x 24.

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Yes, you are exactly right. If you put a deal together like this you would profit $70,000 (less transaction costs and other expenses that I won't go into here). The problem is that a deal like this would be very difficult to find for lots of reasons. Not impossible, but difficult. The competition for that deal would be pretty stiff and other investors would likely bid much higher than 110k for a 180k property, especially if the property needs only minor work.

Buying real cheap foreclosed properties usually is only possible if the property is distressed. A property in saleable condition will be put on the market by the bank. A distressed property could be bought at a sufficient discount to make a flip possible.

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Even if a house didn't appreciate and you can't get a good deal on it... wouldn't it just be, you buy it for $120k, you live there for 2 years, you sell for $120k and pretty much break even vs paying rent for 2 years? Or I guess the fees TC mentioned along with:

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Sure, if you found the right deal. On the other hand, if you found a juicy deal, why not just flip it in three months and take the profit and use that to flip another one? Why sit on $70k for 2 years when you could take that $70k and make anther $30k. Then you could take that $100k and do 2 $30k deals simultaneously. Then you could take that $160k and buy and flip a 20 unit apartment complex for another $160k profit. You see what I'm getting at? In two years you could do a hell of a lot better than $70k if you want to get into the flipping game.
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  #39  
Old 11-26-2007, 11:58 AM
bwana devil bwana devil is offline
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Default Re: Real Estate people: I want to buy a house, advice?

[ QUOTE ]
Sure, if you found the right deal. On the other hand, if you found a juicy deal, why not just flip it in three months and take the profit and use that to flip another one? Why sit on $70k for 2 years when you could take that $70k and make anther $30k. Then you could take that $100k and do 2 $30k deals simultaneously. Then you could take that $160k and buy and flip a 20 unit apartment complex for another $160k profit. You see what I'm getting at? In two years you could do a hell of a lot better than $70k if you want to get into the flipping game.

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spex, what kind of experience do you have w/ apartments? from your posts (which are usually very informative) ive only seen you mention residential w/ the exception of the mobile home park you were considering. im curious about your commercial experience.

one reason i ask my friend is a commercial real estate broker and runs his own biz. we've talked about going in on a deal together down the road. initially we spoke about a small apartment but he tends to think there's better money in storage units.

he says the best deals he's seen in the biz are on a small place w/ extra land and high vacancy rate, build extra units and lower vacancy rate and sell. timeline would be 1-2 years. any thoughts or experience w/ this?
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  #40  
Old 11-26-2007, 12:16 PM
DesertCat DesertCat is offline
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Default Re: Real Estate people: I want to buy a house, advice?

Spex,

One of the things that is freaking me out is the increasing vacancy rates in PHX. I am worried about all these failed flips being dumped on the rental market and forcing rents lower. Are you renting units right now and if so do rents look like they are softening to you?
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