Is this REALLY a good time to buy real estate? (deduction, foreclosure)

[HappyTexan]

Originally Posted by dshawg1

With many foreclosures being stopped, that will drive prices up in the short term and then expect more downward pressure. I think now is a very bad time to buy actually.

I don't know..maybe the foreclosures being stopped might help owners who don't have to compete with the banks now.

They just might lower prices to get out before the banks are back to their usual business.

If I were a seller today that's what I would do..get out as quick as I can.
If I were a cash buyer..I'd be looking at small apt buildings..4-6 units.
There are so many people now turned off of home ownership for one reason or another. Decent rents and you can have some nice passive income.

There was one guy I worked with who didn't understand/trust the stock market so he went into RE instead and had several small 6-8 unit rental apartments/duplexes around town. He employed one handyman guy and was able to retire and have that passive income. He bought each one for cash.

[RiverBird]

I just saw the current CD rates at my bank. Even the bank manager was almost crying when she said they dropped again this week. There's not nearly no return. I'm wondering if I should put what I have into real estate. But then that ties up the cash of course, and how do you know when to buy if the bottom hasn't been reached (will there be a bottom???).

[BMWZ4RUlz]

Originally Posted by HappyTexan

I don't know..maybe the foreclosures being stopped might help owners who don't have to compete with the banks now.

They just might lower prices to get out before the banks are back to their usual business.

If I were a seller today that's what I would do..get out as quick as I can.
If I were a cash buyer..I'd be looking at small apt buildings..4-6 units.
There are so many people now turned off of home ownership for one reason or another. Decent rents and you can have some nice passive income.

There was one guy I worked with who didn't understand/trust the stock market so he went into RE instead and had several small 6-8 unit rental apartments/duplexes around town. He employed one handyman guy and was able to retire and have that passive income. He bought each one for cash.

Doesn't sound too passive to me

[StealthRabbit]

Originally Posted by Bulldog77

... Was this really a good move on his part? YES, if the correct properties (cash flowing) ...Is this a normal real estate crash like we had in the early 90s or something bigger that will take decades to recover from? My guess 7-10yr down cycle on 'Desirable props' (not LARGE, EXPENSIVE, TRACT HOMES, they are dead) then slower climb to value (USA investors / home owners FORGET FAST)

Originally Posted by HappyTexan

...
They just might lower prices to get out before the banks are back to their usual business.

If I were a seller today that's what I would do..get out as quick as I can.
If I were a cash buyer..I'd be looking at small apt buildings..4-6 units. Do this IMHO
...

Originally Posted by newenglandgirl

I just saw the current CD rates at my bank. Even the bank manager was almost crying when she said they dropped again this week. There's not nearly no return. I'm wondering if I should put what I have into real estate. But then that ties up the cash of course, and how do you know when to buy if the bottom hasn't been reached (will there be a bottom???).

There will be a 'moving target' bottom depending on the property type and market area. I would consider putting excess cash into the correct RE. (see below)

had several small 6-8 unit rental apartments/duplexes around town.

Originally Posted by dshawg1

Doesn't sound too passive to me

Oh, but the correct mix of RE CAN be quite passive. 20 - 40 units will avail opportunity to hire a manager. Commercial NNN you just collect checks, the tenant does all repairs and pays your taxes and insurance. A good quality REIT (Be Careful ) can be passive and Profitable as well as cash flow.

I would look to buying small accessible, desirable multifamily units in a retirement friendly location. (I have several on my Radar). I would be very cautious of buying single family, and probably avoid. FWIW $.02

(I got a question from this thread, but can't DM or Rep the person, so... I use Loopnet as one of my sources to locate investment props in USA. It allows a specified search and reply by zip code. (there are a few commercial listing services). BUT, you also need to find a very nice commercial broker who will turn you on to good deals)

[HappyTexan]

Originally Posted by dshawg1

Doesn't sound too passive to me

Earnings derived from income property is passive income.
He's not fixing and taking care of those buildings..he hired a handyman.

[elamigo]

To me a big factor is for the individual to look at himself and be honest. Can I REALLY afford this house?

I do not care what others tell me regarding buying a house whether they be friends, family, real state people, etc. Can you really afford that house.

If you are blinded with this obsession of the American Dream without making sound economic decisions, you will be in trouble.

I did not buy a house until I was well into my 40s when I knew I could afford it. I bought it during the times others bought their houses when they should have not. Now they are blaming all those around them for their mistake.

To me the American Dream does not necessarily mean that I have to own a house to be happy and have a life I am happy and proud of. Granted it looks like I will paying for my house in about a year from now and this means it took me about 11 years to pay it instead of 30. I am able to do that because we saved money, spent wisely, and spend on things we really need, not by emotions.

Regardless of what we want to buy, the question is the same, can you afford it and do you really need it. If the answer is yes the odds are that you will not have much of a problem, take care.

[GoCUBS1]

Like any other successful business, rental property investment requires that you know your target market, know what differentiates your product, know your competition, know your risk tolerance, and know how to limit your liability (CYA). And of course the numbers have to work.

I know many have lost their shirts in real estate, but real estate was the best investment I ever made. My SO and I came from working class roots. We bought as much investment property as we could in the early 90's. We were right out of college and making pretty good incomes. Every penny went toward buying up rental properties around Chicagoland. We have never worked with a partnership or REIT.

We were in our early 20's and very highly leveraged. But we did our homework. We carried 7 investment mortgages EACH - the maximum allowed at the time. In today's market, we'd never haven gotten that money. We took advantage of the easy financing and it paid off for us. We bought more investment property and then leverage our property into buying and expanding other businesses. We have taken big financial risks but have a tolerance for it. I am comfortable with debt and being highly leveraged in business/investment. I know many disagree with this. We still own all our income properties (we were never "flippers") and continue to draw good income from them.

In the beginning, we did all the renovation/maintenance on our properties. We now hire independent contractors for this. We have never worked with a property management co. We have one trusted realtor with whom we occasionally work. We handle sales/advertising, contracts, rent roll, tenant communication, licensing, etc. So we are still "active" investors. It really isn't rocket science. We have a good system.

This week we will start the eviction process for one tenant. Once a tenant is 5 days late, the eviction process begins like clockwork. We've heard sad stories from tenants/prospects about inability to pay. I have to cut them off as I do not want to know about personal details. Sometimes kids may be involved. But this is a business and you must be prepared to handle these types of situations.

I have not bought investment property for 10 years, but am now in the market again. Prices are becoming more reasonable and the rental market is strong in our area.

[jghorton]

Since we've never faced a housing bust quite like this one; or an economy and employment situation like this one ... it's anybody's guess what constitutes a "good investment." At some point, housing prices are likely to start back up, but when and how long it will take to absorb the housing inventory glut and get RE on a profitable track again, is pure speculation.

On the other hand, there seem to be very few strong, reliable investment vehicles available: Traditional CD's and Treasuries are in the tank; the stock market is over 11,000 - but, does that really mean it's safe to get back in the water?; the commercial paper market is looking shakier all the time; Real Estate will continue to 'wallow in the bottoms' until the available inventory glut is absorbed -- which could take a long time; bonds are quite tricky and unpredictable .... yet, who can afford to simply sit on the sidelines without investing in something??

Real Estate is probably as good as anything else, but sitting on the sidelines (in cash) may be preferable to uncertain, high risk investments ... or losses. I think a lot of us are looking for a "good investment" these days.

[PeepoRsheep]

Originally Posted by Bulldog77

I have friend who owns a house and still owes on it, and also owns a vacant lot which he still owes on. Instead of paying off the lot or paying down his house, he purchased a rental house. Was this really a good move on his part? He's in his early 30s and has plenty of time to pay off the debt but there is quite a bit of debt there.

Others are telling me that if they had the cash, they would be spending it all on real estate. Prices are down and interest rates are low, but won't prices fall further when interest rates start to increase? Is this a normal real estate crash like we had in the early 90s or something bigger that will take decades to recover from?

I think through the end of next year (at least) is a great time to buy RE. But the way your friend is doing it is not the way to go about it.

[LeavingMA]

Originally Posted by Bulldog77

And that's difficult if you only have 20% down. Dave Ramsey suggests not investing in real estate unless you can pay cash but very few people have the cash to buy real estate.

That would be nice, but with artificially low interest rates and the government backing mortgages, it keeps prices higher and makes real estate less affordable. Be nice if people at least starting putting 20% down at least.

I'm starting to see the shift that some people are realizing their home is a place to live and not an investment, and they are becoming more concerned with paying the mortgage off than concerned about what it is worth.