Wow, do I ever feel like a genius :)

[motion]

A year and a half ago, I put my ball$ on the line, sold my investments in SoCal and put everything, and I mean everything into the Phoenix market. Its paid off very nicely, as the chart below illustrates. I've been selling off my properties during the past 6 months... 3 homes to go... and now I'm moving into the Albuquerque market.

If we all go over to Alb and start buying up the inventory, we can create the same situation that occurred in Phoenix... you know, rampant investor speculation, flipping, all that. I'm betting another 20% price appreciation in the coming year. So, each $175K house with 20% down - about $35k - should appreciate around the same $35k... VOILA!!! 100% return on investment!!!

Anyone want to come along for the ride?

[CamB]

The finance major, and investment banker, in me (there isn't much else) suggests that you have absolutely no concept of how risky that is, or you wouldn't be doing it.

Yes, you might make 50% on your money. No, its not worth the risk.

This actually has a name - the bigger fool theory. You are relying on entering a market and creating speculation in the hope that an unsophisticated group of buyers will move in behind you to buy at inflated prices. Think that through...

I am glad you made your money in Phoenix though

[legion]

Isn't that the theory that Trump operates under?

[fintstone]

I agree. You must have slept in a Holiday Inn Express. If interest rates remain low I have no doubt that there are significant gains to be made in the Abq market. Much of the city did not participate in the appreciation seen elsewhere. It has started now in the better areas as folks who made big bucks in CA and Vegas push east. The homes in the Far NE Heights where my house is are up at least 25-30% over the last year and only stay on the market for a day or two. If I had some funds to invest...I would probably join you.

[motion]

Money is flowing into Albuquerque from 3 areas:

1. SoCal money diverted from LV
2. SoCal money diverted from Phoenix
3. Florida/Gulf Coast

Why?

1. Albuquerque has not had the rampant appreciation seen in LV and Phoenix.
2. Good job base with high paying work force: Sandia Labs/Intel.
3. Builders cutoff sales to investors back in June, learning lessons from Phoenix.
4. Unlike other areas, a home purchased with 20-25% down will cash flow as a rental.
5. Continued optimism in low interest rates.
6. Slight rising of interest rates is eliminating many first-time buyers, thereby strengthening the rental market.

[fintstone]

1. Are you still looking on the west side/Rio Rancho?
2. What is your strategy? Are you planning to flip the homes or rent them?
3. Are you building/buying new homes?

[GettinHeadStuds]

Shhhh Motion! What the hell are ya doin'!

Let's these guys work away on their poly bronze bushing winter project while we hord foreign territories!

=)

[CamB]

Originally posted by motion
4. Unlike other areas, a home purchased with 20-25% down will cash flow as a rental.

I take back some of my tirade. The houses may have some value left...

Just remember the dot-com bust. Eventually the musical chairs stops.

[M.D. Holloway]

Good for you Richardo!

[Joeaksa]

Friend of mine bought a nice house 3 years ago for $216k. Its now on the market here in Phoenix for $575 and getting nibbles.

Makes me very happy that I bought a house that is bigger and nicer than his is 4 years ago for $220k.

The market has slowed in Phoenix. 6 months ago a house would go on the market and people would show up and have a bidding war and usually it would go in hours for $20k over list. Now they are still selling but in a week and almost always for list.

Good time to own property.

JoeA

[motion]

Originally posted by fintstone
1. Are you still looking on the west side/Rio Rancho?
2. What is your strategy? Are you planning to flip the homes or rent them?
3. Are you building/buying new homes?

1. NW side, but not Rio Rancho. Too many new homes out there are depressing the rental market. I'm sticking closer to downtown, but still on the NW side. I like the Paradise Hills area a lot am trying to find deals there, although they are hard to find. Leaving SW side alone... what a mess down there.

2. Definitely not flipping.... unless the appreciation is sky-high, like Phoenix, in which case I will happily take the profits and sock them away in something far safer. For me, flipping is 24 months, not your usual scenario. My intent is to keep half of the homes for retirement income, paying them off in 11 or so years. The other half will be sold in 24-36 months to pay off my primary residence here in OC and buy my F40 (assuming there is decent appreciation - if not, I'll just keep them all for retirement income)

3. Buying newer, 2-6 year old existing homes, preferrably with reliable tenants already in place. I'd love to buy new homes in dirt phase, but the builders aren't allowing it right now.

[fintstone]

Sounds like the strategy I would use too.

[tabs]

I remember Joe Kennedy once heard the Shoe Shine boys touting whcih stocks they would buy....he figured if they were in the deal their was no one left to sell to...So he got out of the market that was back in 1929...a few months later and all is history....

Now might be a good time to consider shifting your asset allocation from RE to some other investment vehicle.

The other choich is to buy and be prepared for the ride over the next 5 to 7 years....

Every business has a boom and bust cycle the last time someone said this time it is differnt was in 1999...and unfortunately I had my head handed to me....of course I exergrate a bit I was never an end of history believer, but the effect was the same regardless.

[fintstone]

The last real estate crash actually drove the rents up in the areas where I had single family rentals because everyone was either unable to buy or afraid to. The high interest rates drove up competing house payments even though home prices dropped.

[Joeaksa]

Am getting 7% tax free on bonds, about as safe as can be. As I am about 10 years away from retiring its going to stay there. Planning on selling the house and walking away with $3-400k in profit and buying a place up in the hills.

JoeA

[fintstone]

Great plan! My plans are similar if my wife will cooperate. Unfortunately I need to either buy here in Las Vegas (after market run-up) or walk away from a very lucrative position to return to a less expensive home market with a lower salary.

[adomakin]

stick your profit in some real good cocaine and push that for a while. returns will be great and its probably less risky!

spose it depends on how much of your profit you are going to re invest. if you can afford to not make the profit that you are expecting to make then go for it. if you can't then buy the coke.

[Joeaksa]

Yea, right. Delorean tried that and see what happened. Blow is a real good way way to ruin your life...

JoeA

[motion]

I agree, this strategy is risky if you approach it from a capital appreciation viewpoint. But, with 25% down, 30-year fixed rate mortgages, in the end, without appreciation, I believe its still a conservative method to gain retirement income.

Joe - I like your plan.. someday, I want to do the same, but in Montana.

[adomakin]

joe, it was a joke.