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Old 04-11-2008, 07:53 PM
 
Location: Championsgate, Fl
986 posts, read 3,535,291 times
Reputation: 291

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You will notice i go off onto a tangent and forget a point i was making....lol

You are right, there are areas though that havent reached levels that they should be at. Two i can think of immediatly are the Hunter's Creek area and some areas in St Cloud. But in terms of areas i deal with every day, i do believe there are properties at levels they should be, its just ashame, there are so many over priced properties which if you have a realtor who wants to earn either a high commission (because the over priced properties typically have a higher commission) or doesnt want to look very hard, then they are harder to find.
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Old 04-11-2008, 08:56 PM
 
670 posts, read 1,734,832 times
Reputation: 270
Quote:
Originally Posted by cfIfan View Post
As i think i told you before i am originally from the UK. When i was there at university i studied law, in my final year i went to work in a firm and absolutly hated it with a passion(im afraid i feel about attorneys the way most feel about realtors....lol). So i completed my degree then went on to train to be a real estate agent in the UK which is alot harder than here. I trained full time for 2 years and then went into the industry in the UK on a part time basis because i was going into the family business. So although i may be trained here in the US on the usual short course, i do actually have training in both law and real estate which i believe holds me in good stead.



I have a client who was thinking of renting a townhome over here in Winter Garden, for $1350 per month for a 2/2 1200 sq ft. I sourced them a townhome in pre foreclosure 3/2 1400sq ft for $160,000 in the same subdivision as they wanted to rent. At this price their mortgage and escrows and HOA would only put them around $50 over renting, so in their situation buying was better.
ill buy you a drink sometime to show there is no hard feelings...;-)
Wow, congrats!
Didn't know about the training in UK.
At $160K that makes sense. $1350 x 120 = 162K.
The 120 rule is amazingly accurate in my experience.
Taxes, HOA fees and .5% towards upkeep puts expenses at $6170 (pure guess)
$1350 x 11 (empty month) = $14,850
$14,850 - $6,170 = $8680
$8680 = 5.4% before taxes or 3.6% after tax CAP
PE ratio of 18 which is not a bargain but not bubble either.

In this climate for me a PE ratio of 18 is a no go.
I'd buy the property at 120K though, if the rents looked solid as well as the construction. At 120K that's 7.3% before taxes. I hate townhouses but if the numbers were solid at 120K I shut my mouth.

I think you did good by your clients.
But for me, the price does not reflect the risk.
Risk based analysis = 1 - 3 trillion dollar war, on verge of an economic collapse, trillions at risk or already lost on dubious financial instruments held by banks....
MEANS I want a steep discount.


This is how I look at a property.
_
Quote:
Originally Posted by cfIfan View Post
You will notice i go off onto a tangent and forget a point i was making....lol
Actually enjoyed your posts.

And on topic... tomorrow I see two properties: one a short sale, the other a foreclosure.
Think the short sale is under contract already (spoke with realtor this afternoon) Was going to put an all cash offer offer for 132K. (verbally she had said she would take a 150K cash offer to the bank) said somebody came in at a higher offer.
So, back on topic, she was going to take my 150K offer to the bank, asking price: $249,750. (peak of market in 2005 guess = 370K)
Oh well, it was a long shot (LONG) and she told me before she hung up "there's a lot more coming."
She is showing me the house anyways, I think I will really like it (love the neighborhood) but for 50K I'll wait.
Oh, I was guessing about 30-50K towards fixing / upgrading the house
_

Last edited by jbravo; 04-11-2008 at 09:12 PM..
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Old 04-11-2008, 09:06 PM
 
Location: Championsgate, Fl
986 posts, read 3,535,291 times
Reputation: 291
Default hi

Well as you know thats the thing, every person is different and we all look at property different. while understand what your talking about and do see the logic, for me there are exceptions to the rule. Just as an example the location. Lets say you could rent a house in Davenport based on the math for what you could buy it for say $150,000, but if you looked in an area like Celebration, you would be lucky if you could find a 600 sq ft 1/1 condo in celebration. So although you would have to use the figures for celebration for an apples to apples comparrison each area is different.

But i do understand what you mean, but just based on the figures you are talking about such as a townhouse for $120,000 i dont know if they could in my area reasonably fall that far. That being said there is a house 3/2 1800 sq ft for $197,000 the lowest in the area, but it would need a lot of work. It must have been a rental, its only a few year old but it needs TLC and a new Kitchen as it was ripped out. Even at that price in my opinion it is over priced becasuse there are other properties same size without problems for $210,000. For a regular kitchen plus appliances you are looking at a minimum of $20,000 plus if they demolitiond the kitchen who knows what other repairs would be needed, so you could spend over $50,000 without knowing it and end up being $30-40,000 over comparable properties.

But for alot of people, thats how they look at and for them it does make sense.

But i am glad you enjoy my madness.....;-)
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Old 04-11-2008, 09:23 PM
 
670 posts, read 1,734,832 times
Reputation: 270
It's not the price cFIfan.
If $150K got me a $ 1600 rental then great!
If a $250K got me $2200 rent then great also!

If a $70 townhouse got me only $450 then I'd pass.


Look over carefully my numbers in the long example above (your 160K for clients.)


Really, look it over, it's NOT the price I worry about it's the return on investment.
As a side note, prices WILL revert to this medium anyways.
Just think of RE as an investment (a real one NOT speculation)
What's the PE ratio?
What's the capitalization rate (CAP)?

I really have the historical charts for these things, I can post / e-mail. We are still in bubble territory.
Nothing you or I say changes this.

_

Edited my post above and went back on topic. Will post Monday about my experiences.
_
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Old 04-11-2008, 10:16 PM
 
Location: Championsgate, Fl
986 posts, read 3,535,291 times
Reputation: 291
Default I see

I do see what you mean, but i guess what im trying to say is that most people or at least alot dont consider that view of it, because if someone is buying a home, they are not concerned on what they could rent based on that price analysis, they are considering what their budget is and what they can afford. Simply because you should also consider the intangible aspect of being a homeowner. The fact it is yours. You can make changes which you cant in a rental. The fact that you walk up your front path, put the key in the lock and open the door to the home you actually own (be it through a mortgage company....lol)

For many this is more important. I know it is for me. Besides, I believe it is important to get on the property ladder and have something like that. Of course the price has to be right, but that also ties in with living within your means. Alot of people bought properties that wernt within their means, and it sadens me, but i know Mortgage companies played on this and im sure some unscrupulous realtors did aswell, and that is why you are seeing people who bought properties on mortgages which were bad because they couldnt really afford it in the first place, otherwise they would have qualified for a regular mortgage, and if that is not bad enough, they are going to be in even more trouble when they adjust.

Whilst i agree with you that their is a cost analysis, and there most definatly should be with what is arguably the biggest thing you will ever buy in your life, (apart from the yacht i have in Monaco, and the 747 i have hangered at OIA for whenever i want to go anywhere, oh i must not forget my private island in the Carribean...lol) but there is also an intangible aspect of owning your own home, which just cannot be dismissed.
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Old 04-13-2008, 03:29 PM
 
670 posts, read 1,734,832 times
Reputation: 270
Quote:
Originally Posted by cfIfan View Post
I do see what you mean, but i guess what im trying to say is that most people or at least alot dont consider that view of it
_
They should!!!
And why should they?
You answer this yourself
_
Quote:
Originally Posted by cfIfan View Post
Whilst i agree with you that their is a cost analysis, and there most definatly should be with what is arguably the biggest thing you will ever buy in your life
Anyone can use the same analysis I use to decide if renting is CHEAPER than buying.

As to the intangibles; those are true; however, how about the freedom of mobility?
lastly in a declining market the intangibles have to be weighed.
Is being able to chose your paint color worth 25-50-75K because prices dropped another 10-15% worth it?
_
My own rental is $1450 / month across a private beach in a pretty exclusive area.
Guess what buying there would cost me?
Guess which is cheaper.
Do I enjoy it any less?
Nope.
_
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Old 04-25-2008, 10:06 AM
 
2 posts, read 4,247 times
Reputation: 10
Quote:
Originally Posted by jbravo View Post
The bank negotiated and agreed to an offer based on contingencies?!!! (inspection)
_
Sure, they are interested in the bottom line on what they get out of the sale. I have a 10-day window after they accept to back out per the contract I have with them, which gives the buyer time for inspections. This is a standard Florida contract. I let my agent haggle with them over the HUD-1 while I concentrate on securing financing and defining the closing costs.

By the way, I agree with earlier comments regarding finding an experienced real estate agent with familiarity with short sales. This is crucial - my agent contacted the lender early, made sure the seller had all the hardship paperwork in and approved before I ever got close to an offer. There were also some seller liens that had to be resolved as well, and the agent made sure to follow up and make sure they were paid/resolved to the satisfaction of the mortgage broker.

Inspections are done, found some live termites and got them to back off another $1.5K to pay to have the house tented - down to $363,500. No structural damage, but the house does need to be treated.

I paid for an independent appraisal last week which came in at $414K so will have ~50K of equity at today's market value. Closing still set for next week - very happy so far with progress.

Last edited by jim-k; 04-25-2008 at 10:26 AM..
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