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That $50k house is in a good location, just not in Florida. Those houses are actually underpriced, theres nothing wrong with the cities except not enough good jobs. Crime in those cities is less than the crime in most parts of Florida.
For those of us self employeed, we can get a great deal with those $50k houses. I am not an investor and not looking to flip to make a quick buck, I want an affordable house to live in. I cant afford Florida.
You just don't get it, you are an investor when you buy any real-estate and it is your job to get the best you can for the best price that will appreciate. When I use the term job this is what I mean. My nephew was renting from me and we would always have the same kind of conversations. He just wanted find something he could live in cheaply and at least feel like he owned something rather then pay rent.
He had a little money saved up and we started looking for a house for him. We found a real nice fixer upper for $110,000 in a pretty nice neighborhood. He wanted to buy one for like $75,000 near a rail road and an industrial park. Price was all he was looking at. Make a long story short he bought the fixer upper we found. That was about 6 years ago. He has made it really nice inside and out with beautiful landscaping and so forth. That house, even in today's down market would bring $250,000.
That is a $140,000 profit or addition to his net worth. How long do you think he would have to work at his job and save before he saw $140,000 sitting in a bank account? Probably never, it only can be done in real-estate. You are always investing even if you don't think you are. Some will be good and some will not be so good but try to do the best you can, don't sell yourself short. Don't buy trash just because it's cheap. If those $50,000 houses were good deals they would be snapped up quick. Investors would be coming from all over the country to snap them up. They are $50,000 because that is all they are worth, not because they are some undiscovered secret.
Net worth is such a stupid term, all i care about is how much disposable income I am earning. Whether a house is worth 50K or 800K doesn't matter when you are living there. It only matters when you sell. I don't want to sell but settle. Homes were a good deal in the past, what's 15,000 in 1960 worth in today's dollars, 150k? Anything more than that is foolishness. Oh and when you do sell investment property you get hit with capital gains taxes, really nice. real estate costs money to maintain, repairs,TAXES,insurance and is a lot of headaches for the inexperienced. As for me I would probably buy the house near the industrial park and the railroad tracks, I could put my business close by and drive less. No one would complain about the noise when I work on my car because the train would thunder by from time to time. If Florida is so great, why are there other places people live in the USA?
If you make the same salary in the north as you do in Floriduh, why not cut your expenses by living up there instead of spending half your paycheck to rent a condo? The run up in the last 5 years in real estate is without precedent, and with the economy as unstable as it has been a collapse is not impossible. Even if it stagnates, the profit is gone from real estate. Overpriced places like Florida with no natural resources won'tbe able to compete in the "global market".
Rick is right, theres no profit to be made anymore in real estate, at least in Florida. Would of been a great deal and investment 5-10 years ago but not today. Your nephew made money because he bought before the bubble and sold at the peak. It will be a long time before another bubble comes. The last bubble was back in 1980 or something. I checked the appreciation predictions and in many metro cities, it isnt even going to keep up with inflation in the next 10 years! Plus you lose all that money on property taxes and insurance, especially on an expensive house!
I would be happy to buy a house thatll appreciate but with the bubble over, theres very few places still appreciating and prices are already way too high for me to afford in the first place. Those $50k houses do get snapped by investors all the time. My friend lives in a town where half the houses are owned by investors. The locals refuse to deal with the greedy investors and the outsiders buy from the locals who price them much better and are willing to negotiate. Basically we are boycotting the investors. Many are forced to auction them off and are lucky to break even on the sale but lose out because of taxes and insurance. Thats why they are so cheap and investors are wisening up and not buying because we refuse to deal with them and will make them lose money for their greed.
Rick is right, theres no profit to be made anymore in real estate, at least in Florida. Would of been a great deal and investment 5-10 years ago but not today. Your nephew made money because he bought before the bubble and sold at the peak. It will be a long time before another bubble comes. The last bubble was back in 1980 or something. I checked the appreciation predictions and in many metro cities, it isnt even going to keep up with inflation in the next 10 years! Plus you lose all that money on property taxes and insurance, especially on an expensive house!
I would be happy to buy a house thatll appreciate but with the bubble over, theres very few places still appreciating and prices are already way too high for me to afford in the first place. Those $50k houses do get snapped by investors all the time. My friend lives in a town where half the houses are owned by investors. The locals refuse to deal with the greedy investors and the outsiders buy from the locals who price them much better and are willing to negotiate. Basically we are boycotting the investors. Many are forced to auction them off and are lucky to break even on the sale but lose out because of taxes and insurance. Thats why they are so cheap and investors are wisening up and not buying because we refuse to deal with them and will make them lose money for their greed.
If you actually believe what you are saying, either you don't think you are going to live very long, or you are happy to live a life of poverty. It will be tough retiring by saving your pennies in a jar. I think I will have to just agree to disagree with you from here on.
Your nephew bought a house SIX YEARS AGO. How much is that house by the railroad tracks worth now? It appreciated, too. The point is that cheap house is no long cheap, so the people that didn't buy six years ago now have to leave Florida.
I know, it happened to us. We moved out of Florida over a year ago. In southwest Florida starter homes were going for $300,000.
Congratulations on getting your nephew to buy ANYTHING six years ago. Yes, he probably did get a better bang for his buck by buying the better home. You were right. But these folks that didn't buy are now out in the cold. The same rules don't apply anymore.
Your nephew bought a house SIX YEARS AGO. How much is that house by the railroad tracks worth now? It appreciated, too. The point is that cheap house is no long cheap, so the people that didn't buy six years ago now have to leave Florida.
I know, it happened to us. We moved out of Florida over a year ago. In southwest Florida starter homes were going for $300,000.
Congratulations on getting your nephew to buy ANYTHING six years ago. Yes, he probably did get a better bang for his buck by buying the better home. You were right. But these folks that didn't buy are now out in the cold. The same rules don't apply anymore.
Actually the $70,000 house would not have been that bad an investment. I pass it now and then and it looks like a rental with cars in the front yard and the neighbors also all seem like they are renters. Everything over there is run down. I suspect at some point it will all be bulldozed for some kind of commercial thing. I didn't want him to buy it because he was looking for a place to live and that place was awful for any price.
I would not live there, (Honestly) for free and if you were paying me to do so. I fixer upper for the right price in a good neighborhood is always the best investment. You have to read the other posters other posts to get a feel of where he is coming from. He wants someone to give him a house for free. The prices of houses are coming down to a more realistic level. One of the main reasons houses are not selling is not because they are still over priced but people don't want to buy because they want to see just how low they will go.
Once there is a leveling off, people will feel comfortable buying and the housing market will get back to normal with people buying and values gradually going up as it always has. What will have taken place throughout the last few years is when they do level off it will be at a higher level then in the past. This is as it should be. Don't expect cars to begin selling for $3500 any time soon, it doesn't work that way. As far as the other posters ideas that real-estate is no longer good to invest in, I think a lot of people would disagree with that.
I know people who are on the edge of their seats to buy but just want to wait for the time being and see where it finally goes. Look for something to trigger what may be a buying frenzy once it hits the bottom and people will be clambering for what they will perceive to be bargains. Contrary to popular belief, people do want to buy, that has never changed, they just want a better deal.
We rented from my husband's boss. When the man retired my husband was out of a job and we were out of a place to live. Now, bear in mind that we were in southwest Florida, which became WAY over inflated. We were looking for a house in August of 2005. The height of the housing boom. Cape Coral is considered the most over inflated in the country, by about 18.7 percent.
We realized that housing prices FAR outpaced salaries and said to heck with it and moved to Tennessee.
The reason that salaries didn't keep up is that retirees were selling there houses up north for big bucks and paying those huge prices because it didn't seem all that bad to them. The problem was that folks like us decided we didn't want to buy in and left.
The local daily paper even did a story on my family about us leaving. It talked about how middle class working people couldn't afford to ive in the area. It said that Fort Myers and surrounding areas were having a problem finding workers. These retirees want someone to wait on them at restaurants and Walmart and want a police force and can't figure out where the workers are. Not their fault. It's just the way things are.
Anyway, I agree that retirees are still going to want to come to Florida. And I also agree that folks are waiting to see how low prices will go. You're right. Everyone wants to have a home of their own.
The BIG problem is the housing insurance in Florida. That may keep people from coming. Also, the retirees that are already there are now getting hit with huge tax bills and deciding they don't want to or can't pay the bill.
We moved to Tennessee in October of 2005. There was a couple from Fort Lauderdale that had moved here a few days before us. I met them when I was registering my daughter for school. She was a teacher and he was a cop. They got their tax bill and said forget it. They had bought their Florida home for $65,000 and sold it for $250,000. You should see the house they bought up here!
Having said that, I still miss some things about Florida and am not completely happy here, either. The people are not that welcoming.
Anyway, I hope that nephew of yours thanks you everyday for giving him such great advice!
Miami prices hardly budged above the inflation rates throughout the 1990's, plus interest rates were lower than in the 1980's. Miami got underpriced for a couple of years.
Am I wrong or isn't it considered reasonable when the median price of a home is no more than 3X gross annual individual income? Why wasn't real estate so volatile in the years when the US was a powerful creditor (1940's, 1950's....) and only became out of control in the inflation ravaged 70's and energy choked 70's-80's? Recent years of fiscal irresponsibility have caused the stock market bubble and real estate bubble. I liked the stock bubble a lot more!
There was a time when housing went from affordable to unaffordable. In Miami it was the 1980's Here in Key largo it was during the late 1990's. Just curious how it is in other parts of Florida. Also is this going to be so forever,or will this state ever be affordable to those who work here?
You can still buy a house in Florida as they are declining in value each day but you won't be able to afford to insure it or pay the taxes on it!!
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Six years ago...
