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Old 09-09-2019, 10:56 AM
 
205 posts, read 45,297 times
Reputation: 500

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Quote:
Originally Posted by Spokaneinvestor View Post
Case in point and why I am selling some investment property. Purchased 1400 sq ft single family home with cash for $172K in 2015, continuously rented at 6% net cap. Under contract for Sep 30 close at $290K, sold as-is no repairs to a couple as their first income property. They are financing it with 90% LTV investor loan 30yr conventional at 4.25%. Including property taxes and insurance BUT no reserves for maintenance or other expenses, they are negative cash flow of $375 per month. When I see mom&pop investors (who really is an investor when they finance 90%?) doing these types of deals, I think it is time to start reducing exposure and prepare for a slow down. Seems like the last gasps of a go for broke market is stupid deals like this one. Although I am happy to take my $118K gross gain on the sale plus years of positive rental cash flow and run for the hills.
You kind of have to feel bad for the tenants of these amateurs. You know there will be some system failure in the first 90 days after they close, and they'll be horribly under-capitalized. Then they'll start trying to jack rents up and wonder why they have turnover.
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Old 09-09-2019, 12:06 PM
 
141 posts, read 31,512 times
Reputation: 290
Quote:
Originally Posted by Skipito View Post
You kind of have to feel bad for the tenants of these amateurs. You know there will be some system failure in the first 90 days after they close, and they'll be horribly under-capitalized. Then they'll start trying to jack rents up and wonder why they have turnover.
Exactly my thoughts. They will try to jump the rental rate above market in May 2020 when the lease expires and then wonder why a tenant heads for greener pastures. The home is 17 years old with original HVAC, original roof, original appliances except dishwasher, and badly in need of carpet replacement. Never painted and it needs it. Something large is going to go sooner rather than later.

Why would any “investor” sign up for negative monthly cash flow before reserves?? I just simply don’t get it. Appreciation is nice but how can you lose money every month from the beginning and hope appreciation catches up? At the rate they are losing money, they need 1.5% appreciation just to stay even without ANY maintenance costs and that doesn’t take into account the costs of selling if they decide to sell later.

Last edited by Spokaneinvestor; 09-09-2019 at 12:19 PM..
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Old 09-09-2019, 01:08 PM
 
2,025 posts, read 878,674 times
Reputation: 2248
Yes

https://www.cnbc.com/2019/09/09/fall...rs-market.html
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Old 09-09-2019, 02:44 PM
 
Location: Southern Most New Jersey
1,231 posts, read 874,626 times
Reputation: 2121
Prices are falling in many of my search areas. Or house are just not selling. It is not just Zoo Jersey.
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Old 09-09-2019, 07:30 PM
 
536 posts, read 231,211 times
Reputation: 688
I see properties coming down also. At least in our search areas as well as local area.

The comps for last fairly recent property we sold are even considerably down already.
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Old 09-13-2019, 08:01 AM
 
Location: Weehawken, NJ
159 posts, read 176,528 times
Reputation: 164
Morris County, NJ here..

We closed on our home in November 2018 after spending a hectic 1.5 years in bidding wars with very low inventory. I still casually look and I certainly see prices are going down or at a plateau. There is A LOT more inventory that there was last year. A lot of homes are getting 10-20k price drops after sitting on the market for over 3-4 months.
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Old 09-13-2019, 10:29 AM
 
4,864 posts, read 12,092,431 times
Reputation: 3558
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Originally Posted by NJBoy3 View Post
Prices are falling in many of my search areas. Or house are just not selling. It is not just Zoo Jersey.
What are you seeing in the MPLS/StPaul metro?
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Old 09-13-2019, 04:15 PM
 
141 posts, read 31,512 times
Reputation: 290
Just saw a property in Indiana ... Greenwood .. 7% haircut and 265 days on the market and finally goes pending. Seller resisted dropped the price at all for the first six months. Then started the every two week price cut - death by a1000 paper cuts. Tells me stuff isn't moving in that market.
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Old 09-13-2019, 04:22 PM
 
4,864 posts, read 12,092,431 times
Reputation: 3558
Quote:
Originally Posted by Spokaneinvestor View Post
Just saw a property in Indiana ... Greenwood .. 7% haircut and 265 days on the market and finally goes pending. Seller resisted dropped the price at all for the first six months. Then started the every two week price cut - death by a1000 paper cuts. Tells me stuff isn't moving in that market.
That's what that tells you huh?
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Old 09-13-2019, 04:23 PM
 
73,527 posts, read 73,335,185 times
Reputation: 51111
Many homes are sitting because they stuck and unless the prices are drastically cut they may not sell .....my son had a bidding war when he sold his westchester home in two days ....he ended up buying another home the day it listed as the homes sitting unsold were just not desirable ....

So many times any slow down may be because of a lack of nice desirable homes and not buyers
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