Is it time to jump back into real estate?

Dantilla · 02-19-2008, 05:58 PM

I hope so. I just bought another house.

First of all, the Pacific Northwest is not Loonyville, South California. While we saw prices rise over the last few years, we didn't see the stupid, unsustainable jumps like Las Vegas and LA. Though I've had fun with fixer-upper homes, I've sat out the last few years. Too many idiots jumping into the real estate market made it impossible to find bargains. Too many homes with shoddy workmanship were thrown onto the market. Now the idiots have left. Things are returning to normal.

I found a bargain. Too good to pass up. Small, older home, on a good-size lot in a highly desireable area of town. The purchase price is substantially lower than anything else around. I will be closing on Friday, and already have it rented.

motion · 02-19-2008, 06:09 PM

Nice! Does it cash flow with 10-20% down? If so, then its definitely a good time for you to jump in

MRM · 02-19-2008, 06:10 PM

Of course not. This BBS has already conclusively proven that the iphone will fail, we are not in a recession, the stock pickers on the board always post 40% returns and real estate will fall another 40%.

I bought a lake place in September.

Baron Rothschild was asked what was the secret of his success. He replied that he never bought at the lowest point but never sold at the highest point. Rather, he bought and sold when the value of his possession made it a good deal for him to do so.

Whether buying real estate is a good deal depends on you and the market. If it is worth it to you to have it, you are getting good value for your money. The broader market will always follow value. I think a nice house in a nice area of town with good schools will always be a good value. Smaller homes in nicer neighborhoods are the best values. I'd say it sounds like you've done well.

My stock pick for the year isn't up 40%. It was up a little over 20% but now it's back down to about 10% since January. But it just paid a 5% dividend that I reinvested. So what that makes my opinion worth is anyone's guess.

911Rob · 911Rob's Garage

Congrats Dan,
sounds like you did real well.

HardDrive · 02-19-2008, 06:48 PM

We have been looking at getting a flipper house.

Dantilla · 02-19-2008, 09:03 PM

Quote:

Originally Posted by HardDrive

We have been looking at getting a flipper house.

Good time to start sniffing around. Lots of motivated sellers. Be prepared to walk away from many before finding one worth buying.

This purchase will not be a quick flip. The renter wants to live there for the long haul- We have already discussed the possibility of them purchasing the home from me down the road.

This place has solid structure, contemporary plumbing and electrical systems, and doesn't even have any rot/bug issues in the crawl space.

It's a semi-cute little house, and if I own it long enough, will get better looking with some siding/trim/paint changes.

Rule number one when looking at fixers: I don't want structural rerpairs. I want my work to be very visable. Trim, paint, refinish floors, landscaping, yada yada....
I like houses that need "Lipstick & nail polish". They are the most fun to work on, and have the greatest profit margin.

red-beard · red-beard's Garage

Here in Houston, you still can still have positive cash flow on a rental property. Values are still going up, but only 3-5% per year.

turbo6bar · 02-20-2008, 04:40 AM

I bought an investment property (long-term fixer and flip) last June. Purchase price was roughly equal to land price. If market prices decline by 20% over the next few years, I'll still make decent money. If prices stay flat to down, I'll do really good.

For pure cash-flow investments, finger is on trigger, but I'm still waiting. The rental market has not turned strongly positive, and foreclosure pricing is still under pressure. Homebuilders, contractors, and suppliers are visibly shaken, but buyers are still making deals. When buyers start to waver, my master plan will be enacted.

As always, the quick flips present the greatest risk. Quality buy-and-holds, with the right numbers, just can't be beat. Give me long-term RE investments over the stock market any day.

Porsche-O-Phile · Porsche-O-Phile's Garage

If you're buying to hold, maybe. If you're buying to "flip", you're likely to get your a55 handed to you.

Superman · 02-20-2008, 06:52 AM

Seattle is a more stable market than elsewhere, as we all know. If the RE market generally is going to recover soon, then yes.....now is a good time to buy in Seattle.

I have to add another comment. I've known a few guys like Dantilla. If you ask them, they will ASSURE you they know little to nothing about this or that topic. But then they will spend the next twenty minutes betraying an intimate and detailed understanding of that topic. And then they will end on a humble and self-deprecating note. Who is fooled by that? Go Dan, go.

Vipergrün · 02-20-2008, 06:58 AM

I am starting to look as well in (oh no) the So Cal area, Thousand Oaks/Newbury Park be exact.

My question is why are interest rates climbing back up so quickly? gone up 1/2%+ in the past couple of weeks.

jyl · jyl's Garage

Seattle doesn't look like a non-bubble market to me. See charts here.

http://seattlebubble.com/blog/

I guess I'd want to know the months of inventory in Seattle. Here in Portland, which was less of a bubble market than Seattle, the months of inventory have jumped (appx 12 months as of Dec) and prices are duly falling.

turbo6bar · 02-20-2008, 10:55 AM

Quote:

Originally Posted by bb80sc

My question is why are interest rates climbing back up so quickly? gone up 1/2%+ in the past couple of weeks.

Despite silly notions that mortgage rates go down when the Federal Reserve lowers rates, rates are going up. The primary reason is the 10 yr treasury bond. Inflation readings are not coming in so nice, so the rates have spiked upwards. The 10 yr was at 3.4% for a short stretch. Now, TNX is hovering around 3.9%.

Jurgen