I guess it is because I don’t get out much, and because I live in a remote spot in a town of just a few thou.
We are wrapping up a spring road trip of about five weeks, and just left Chicagoland, where both our grown kids live and work. The Sunday real estate section of the Chicago Tribune showed a lot of city townhomes, brand new, spec built, at prices in the $3M and over range.
Wow!
No sign of a real estate meltdown for these city-livers.
What is going on where you live and work?
Replies
i was in chicago about 2 months ago,went by one of those condo deal,sign said "starting at 3.5" and i'm sure they are really nice inside but from the outside wasn't anything that special. surely you get a parking space for that price.
makes me glad i live where i do,there is no way that i could live my present lifstyle in a place like that.larry
if a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I thought I had a handle on this but evidently not.
NW Arkansas has 180 repos. I went to Pea Ridge yesterday to see daughter and saw about 6 homes under construction in the same addtion. This is just East of Rogers, Ar. I drive on down about a mile and turn into her additon and they have new homes being adverized , Lease Option NEW Homes. Thats like adverizing the last month rent free in times when its hard to rent property. I didnt understand that.
Ive written several times Ive had a deal with the bank where I buy homes under market value so I get 100 percent loans . LIke where I buy a home for 60 grand thats got an app of 100 thousand. Anyway three loans came up for renewal last week and I needed to harvest some money from them as well. Refinance them for more money. Not a problem doing that but we got to talking [banker and I] about my accountant telling me not to sell homes Ive had for a long time . He said I needed a line of credit off the ones Ive got instead of selling . She informed me IM gonna need to do that anyway because now I need 15 percent of the purchase price down on what ever I buy. So they are requiring mre from me .
A run down on whats happened lately with my flip which isnt a flip anymore time wise. About a month ago a couple wanted my house and another house up the street that was new.. They decided on the new one up the street instead of mine . They signed their name to a contract with 500 earnest and applied for a goverment loan. They had a pre approval letter . Bottom line to the story is my agent called Friday and said they are now interrested in my house. Seems they were turned down on the loan and in the process had the house up the street tied up for 30 days and got their 500 back.
A few days after that happened I got an offer on mine and I required 1000 down payment non refundable . It killed the deal. IN that 30 days Ive kept track of that client and they also have failed to recieve financing to buy a home and they were also pre approved.
Anyway this couple who lost out on the house up the street want to lease/ W option to buy mine as they have to move out of their house . I breifly considered it . I called back with a counter offer . I said first and last months rent and 750 deposit. That was a total of 2250 . If they wanted an option it would be full price and they had a year to find financing with 1000 down payment . It didnt fly. They wanted the lease option for free I guess.
I did some more checking by asking my double agents a question. How many houses have they sold this year from Jan 1 to May 1. One had sold 3 and the other had sold NOTHING. So one agent had made 3 grand there abouts in three months before expenses.Shes lost money and the other is going broke by the sounds of it. The one who sold three is looking for another job.
I asked what was the problem. People dont show up at open houses although three parties showed up at mine over the weekend . They did 6 other open houses and didnt get anyone . I dont have an offer this morning from any of the three. Theres a very low amount of interrest from prospective buyers.
The main reason stated is they cant get them to the closing table because of loans failing after pre approval.
None of my buyers have had any money so Ive stated that they are showing to that type of buyer. They dont know what the other kind is like they said . Seems no one they talk to has any .
But yet I told them renters do have money to pay for first, last months rent , and deposit. One of them said its because they cant buy a house . The other said 70 percent of their calls at the agency are for rentals and they dont have any. I guess it explains the reason I got 50 calls on the last house I rented.
Tim
Tim,
Did you ever build the vacation cabins you had mentioned a few years ago?
As to the original poster's question: I have seen more new houses being started this spring than I recall seeing in the last 2 springs. Still an anemic amount though. More lots in the subdivision 1/2 mile down the road are marked as sold.
Talked with a banker I went to high school with the other day, he said new homes in the 1400 to 1800 sqr ft range are selling, but at a slower pace than the boom years. Large homes are sitting, however he knew a builder who is putting up three 3600 sqr ft specs. Banker thought the builder was nuts.
Another interesting observation was that the number of foreclosures in the paper is about half of what it was a year ago. Maybe the bloodletting has started to slow??? And there are not nearly as many "For Rent" signs out as there were three years ago.
Bowz
No I havent built the cabins . Part of it is unknown knowledge. I feel like thats gambling a bit since Im not in that market. Might have to reconsider it though.
Our problem here is people arent qualifying for loans and no money . People dont have any so they expect 100 percent loans . To get those loans I guess their credit has to be flawless from the sounds of it and they cant have needless debt like boats , atvs , credit cards , etc. This is a country redneck world around here with lots of redneck toys . Hunting and fishing is a big deal here. We have a surplus of water and woods to play in big time.
The house I have is first time homebuyers rated. 96 grand.
Right now I dont have a clue what Im going to do if I cant sell properties . My plan was to flip and rent . Sell some rentals under capitol gain and add some new rentals , maybe build some . Ive got commercial and residential lots just sitting .
For the first time in a long time , I dont have this one figgured out .
The only thing I know I could do is up the rentals. Add 10 units and hold on to my butt till this clears up somehow. I could keep the house for sale and lease it but it would be one high price rental.
Theres been several houses lately that the loans failed on. Id be in the same mess if I hadnt asked for 1000 down and killed the sale. As it turned out it would not have mattered except I wouldnt know where Im at right now . I would have been blaming the customer or the loan company. No looker has been able to buy it so Ive learned that .
Im hoping this month will break the tie with school letting out .
Tim
We're seeing the same thing in our RE market in Grand Junction. The average house here sells for $250-$300K but many builders seem to be going exclusively for the high end, $500K and up. Since the credit markets froze-up last quarter, sales of houses needing jumbo loans and 20% down (prices over $400K) has been essentially zero. I don't know what the carrying cost is for a $750K spec house, but this logjam can't go on forever. It looks like some builders are using their unsold inventory to house workers and the city turns a blind eye to it.Houses under $400K sell quickly, and anything under $250K sells immediately. Why the builders haven't figured that out yet, God only knows.
The lots cost so much here the builders are forced to build higher end homes, Theres very few cheap lots and if they are cheap your not gonna get a lot of money in that neighborhood or the lots are under water or steep
Tim
I'm not sure that now is the time to be selling homes. Buying, yes. Selling, I'd wait. Buy low, Sell high.
Unless you are self financing the sell. Then you take some of the vig ea month. Lease to Own. 400/mo rent and 150 month to the down payment. Or whatever the numbers work out. If folks want 100% financing they are going to get turned down by the mortgage originatrs in this interet environment. So you have to be the bank.
Put a big sign out. 100% Financing. We carry your paper. Buy here, Pay here
Just like the Used car lots
And when you get the house back you have kept ther overage. Make it $xx/month. They can figure that out.
RentaCenter...........for your home
forgot to put in a article from the WSJ yesterday. Hedge fund manager calling he bottom. I don't think he's right. But it's the first one I've seen
http://online.wsj.com/article/SB121010993704671887.html?mod=WSJBlog
edit:
Tim I see you are trying the Lease to Own deal. I was only looking at the post I replied to. So I don't know how you can get them in. They have to have some skin in the game. And the LTO is cheaper than 100% financing from the bank. It's got to be 5k to purchase in closing costs. If they don't have 2.2k to LTO how they getting 5k?
That is cutting it close. Perhaps they should rent for a while
Edited 5/7/2008 5:11 pm ET by Scrapr
Edited 5/7/2008 7:39 pm ET by Scrapr
tim,i remember about 2 years ago you talking about how the fall was coming and i agreed with you.to tell you the truth at that time the fall didn't bother me.my thought was some of these people would move from owners to renters and i could get a better grade of people.
well my knees are starting to get a little weak.here in wichita were still moving along pretty well,but we always lag 3-4 yrs behind on the upside and down. even though 9-11 really punched the aircraft companies hard we at least maintained.
but now whats bothering me is i look at my tenants,they all are out here just punching a clock making a living. most make between 20-35k a year. uncle sam snatches 15-20% of that at least.annual rents are in the 7500 to 14000 a year range. by the time they buy groceries,gas, insurance,car payments and clothes for the kids there just isn't enough to go around. and i'm afraid the landlord is the easiest one to short.did i mention my knees starting to knock?
right now i'm getting ready to close on a lakefront lot on beaver lake,straight east of pearidge for 40k.i felt good when i signed ,but talking to a agent down there at the lake they said they showed 1 house all week and that it is a buyers market.only thing i got going for me is it's lakefront and there's no more of them being made. then i went stupid and bought a house at auction the other day,gave 82k for it,fixed up nice would probably bring 120 in a good market. i knew this wasn't a very good buy ,but it was in a neighborhood that really rents well so i stepped off and bought it.
if my phone rang right now and both sellers said there backing out,i would feel good about it.i've even tossed around kissing the earnest monies off and move on,but i've never backed on deal yet so no need to start now,but i am worried about what the next couple years hold.
you've said things are renting well there,if i had house's ready to go and couldn't get something sold i would just lease them and go on as long as they could carry themselves.
i'm not a fan of rent to own/owner carry etc. reason being is it gives that person complete control of propety and if they want to knock out walls they can[a lot more so on owner carry]then if i get them back i have to deal with the mess. and what did i gain? i got a monthly payment that might be a little more than rent and at least with rent i would maintain some control.
changing the subject a little,just applied for a loan on the above property,got a 5.5% for 15 yrs,i was blown away with that rate,back in the early 80's when times sucked i signed one loan at 12.5 with a 18.5 cap,i would have bet alot that i would never borrow money for a rental at 5.5.....
if you come up with a good plan let me know cause i'm looking for one also.larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
RE; The properties you are buying .
Thats not far from home from me . Im afraid I will say somthing negative thats not necesary. We share our experiences here and I appreciate your imput. You might not appreciate mine Im fixing to share.
Fist off I dont have the answers but I do have some facts . North West Arkansas is in a mess . They turned from enjoying being the top area in the building boom to having the most repos. Theres 870 repos up there in all thats posted when I looked. Be very very careful up there.
Im working on the problem right now as a matter of fact . I went to see a broker last night and spent a couple hours . I just got back from an hour meeting with one of my bankers. Ill still search for information.
In NW Ar , the builders wont stop building unless they are put out of business . Well, I find out its not really the builders. The main source of this message is its investors. We know theres lots of different types of those but from the reports Ive heard they are out there in droves. We are investors too but we are one small kind out there. From what I can gather several kinds dont have an alternate business to draw from. Of course some do but theres have dried up. That brings me to your buying of the land on the water and my acreage overlooking the river valley.
This is my house ;View Image
This is the land ;View Image
The land has been reduced and it hasnt done any good at all. However it comps out cheap for what it is so I figgured it would lead the market . Same with the house. Im getting lookers online but no buyers.
The reason prices havent dropped in NW Ar, is investors. The problem with buying building lots is people dont often buy them unless a house is sitting on it . Lots are harder to sell. So landowners / developers are making additions and that doesnt work so they are building or hiring it done . Theres package deals out there if the builder signs up to buy 5 lots[by contract], they are discounted. Thats where the builders are getting entrenched in the business. If the builders start an addition with 5 houses then the addition has a better chance at getting kicked off. Thats the cases Im seeing in Pea Ridge.
To add to the problem when a builder gets in debt with the lots which dont pay rents and the building is shut down in the area then they are taking chances. In a way they dont have a choice . Bankrupt 300 grand or 2 million, whats the difference?
The developers can be brokers or land owners. What choice do they have if they bought into it ? Its been a good business for several years to own a real estate company with an addition in progress to sell wholesale houses. They dont have a choice either really. Neither business is making a living .
My guess is that it hasnt went bust yet and it has to. Times are hard but it hasnt went boom boom bust just yet. UNtil the surplus goes away it wont get better. Before that happens the investors have to go broke for property prices to come down. I think thats the next step.
Ill share my theory of what Id like to do right now.
I would like to sell what doesnt rent . I think harder times are comming and I dont want to be making any land payments. The new house and the recreational land are for sale and Ill be listing more of it . The time isnt right to buy till enough people go broke in NW Ar and prices come way down. Time isnt right to sell either .
Im thinking about building rentals on vaccant lots and several different types to fit the area. Building material is cheap and so is interest which is really odd. Ive never seen it before like that. Rental property is still a premium because the people that cant buy do to restrictions still have jobs and they have to live somewhere. 3 br rentals are the top rental out there second to none . Im thinking about 3 bd duplexes in residential settings . Those should still be marketable to sell as well as hold them till the storm clears. If it doesnt clear then I feel pretty safe with a 3 bd rental judgeing from the current conditions I decribed. NW Ar job market is very strong and thats a big plus. They have jobs and theres plenty more jobs not filled by looking at Monster.com . Our job industry is as strong as anyones I believe . We just dont make a lot of money. All of our job industries that support the world are strong. Walmart, Tyson Foods [chicken] , and the spinoffs from it like all the chicken /cattle farms. Walmart and Tyson supports an exellent trucking industry along with the forestry.
Thats a report on NW Arkansas . <G>
Tim
geez tim,did you ever go to the doctor and your setting there nervous worrying about that bend over grab your ankles exam,you keep telling your self it will be ok,won't last long. and in walks your doctor with the biggest hands you ever saw! your post kinda makes me feel that way.lol
i hate buying vacant ground,i'm no good at it and all you do is feed it hoping something good happens. well this lake lot is going to be like that i'm sure. the reason i'm taking the plunge now is this lot is in a development called lost bridge village,about 2500 lots with i would guess 250 of them waterfront. all the lots are built on except for maybe 15-20,most of the homes sitting on the waterfront range in the 300k for a 800sf with walkout basement to 2.5mil.my plan is to either sell the one we have there now and build on this lot or hang onto it till someone wanting to build a place comes along and wants it worse than i do.
your post is very relavent though to us selling our place down there.what i have seen go on in the last 3 yrs was whatever the neighbor asked,i'll ask 50k more.and the buyers just kept coming. now about at the beginning of last summer it just died,two reasons i think one they finally topped out at past the stupidity range and people started feeling the crunch coming and started tightening there belt.so we put ours on the market a month in the "are you nuts"range and seeing if someone comes along,if not no big deal,i'm not in a position that i have to sell and i won't even think of starting a new one till this one sells. so thats the plan,i'll let you know if it works.
as far as repos go here,i'm not sure where were sitting as i hardly ever buy a repo,you used to have to get in a bidding war to buy one.i just went on and bought estate houses and let the other guys fight it out. how do you access the info on how many are sitting in foreclosure? that would be good info to have just for rentals.
is that brick house the fire job,or a new house you have built?i'm curious what that home would sell for new there. here no one has a full brick,not even the 500k houses,but i would guess that around here that would be in the 140 -170 depending on baths,it would have a basement ,unfinished,with masonite siding.
pea ridge,that little speck in the road has really grown in the last 5 years,i've seen all the new homes going in as we go thru over to 71 hiway. looks like it would be a good place,still small town living with quick access to rogers etc.
just waiting for the doctor to come in.... larryif a man speaks in the forest,and there's not a woman to hear him,is he still wrong?
I always thought that buying lots was a lot like buying gold . You buy cheap and wait for the market to top out and sell. If you hit your market right its a very good investment . If you can afford to let your money sit till the payout it doesnt hurt. Thats a key bit of information right there. Ive also got lots so you aint in that cannoe thats rocking by your self . My only real problem with my lots are the same as Pony has with his . Im sick and tired of being sick and tired , mowing them.
Be cheaper if we didnt have to have women and kids too but oh well.
Its the burn house . I call it new cause it was new when it burned. Its new now for sure . Ive redone everything .
Look up sueismyagent.com . Go to properties . Go to her seccond page and you will get a virtual tour of the land and the house . The land is awsome ! Well the view is awsome . Its the 45,000 Wont Last listing . Haha .
We have a brick plant in town. So a brick house here isnt as far a reach as it might be for you in your area.
Tried to link it but failed.
Tim
Edited 5/9/2008 1:29 am by Mooney
Edited 5/9/2008 1:30 am by Mooney
Edited 5/9/2008 1:31 am by Mooney
Edited 5/9/2008 1:31 am by Mooney
http://sueismyagent.com/remaxar/modules/agent/agent.asp?p=text&id=4223
Click here for access to the Woodshed Tavern
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Thanks but that didnt work either.
ya, what's with that? Searched and found the site but the copy/paste of the addy doesn't work.
Mysterious things in the land of the midnight sun...
Click here for access to the Woodshed Tavern
Click here to visit the beginning of Breaktime
CTRL + right cick/copy shortcut or ALT + right click/copy shortcut...
these measures force the issue....
Life is not a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaiming<!----><!----><!---->
WOW!!! What a Ride!Forget the primal scream, just ROAR!!!
You know , then I got to thinking as Rez says ;
If you bought the land for family time its a brilliant idea.
We were out one day to ride atvs. Mine wouldnt run when we got out there . I worked on it and it got worse like it normaly does when I get a wrench in my hand . Then it started raining and I thought we should watch submarine races and she disagreed. So she thought we should drive around in the mountains pulling two atvs on a 14 foot trailer. Lots of fun when you come to a dead end in the woods . Anyway;
She was actually looking for land for a cabin. Then if it rained or somthing didnt work , so what ? The rest is history and the family has enjoyed it . I actually get work out of them out there. We keep the atvs out there . All we need is groceries and beer from town.
We pulled a camper out there and we used it for over a year.
I dont know how many kids / grandkids youve got but somthing like that is great to pull them together. I bought a ski boat one time
Tim
tim
I always pay attention to your posts, i guess because we are close to the same area... and we both make up for other short comings buy working a little harder...
In the last 30 days I closed on 3 loans refi'n 1 shopping center and 1 office building and a construction loan... everything under 50% LTV... the rates & terms were good... better than what i got 5yrs ago... ... the construction loans is floating but has a 5%base which it looks like it'll stay at... BUT man I have never had to jump thru so many hoops... seems i had to do 10x the documenting than i've ever done before...
my rentals (office & retail) are strong and demand is very good... but I'm B & C space and I'm attracting people out of A space... i can save someone $500 to $1000mo on office space and they aren't 5 min from where they moved from... it's start'n to matter and I'm on the good end of it for now... same with my retail... I'm in good areas... very good areas... just i'm the older center... but again i'm 60% of the rent with the same traffic count plus i have a subway & dominos in the center which really helps
I sold one shopping center (close on the 29th of this mo) but since the guy put 500k down and bought it "as-is" no inspections ect... I'm feel'n it will close... and one less place i have to cut grass this summer...
Home sales here are still ok... high end NEW is slow... but the good areas are still selling... nice areas under 200k seem to still have legs... 250k 800sf condos with no parking and zero charm... are sitting and will for awhile... i hope to have my condos on the market in the next 45 days so I'll see what happens but... I feel good about what i have and the price points ... i have 20 units i only really care about selling enough to pay off my loans... maybe 5-8 units depending on the units... then i can rent or sell the others... very strong rental market here as so many rentals went condo and depleted the rental inventory...
I experienced things the last 3-4 months i never want to be in the position to experience again... ie... 40% ltv loans being called just because the lender needed funds... and wanted out of the market... loans i've had for 5-7 yrs all auto deposit auto pay... left me run'n but i made it out ok with better terms and lower rates... BUT it consumes time and effort ... alot my fault because i'd always rolled over loans into new loans... and i wasn't ready when they didn't want to roll em
p
"40% ltv loans being called just because the lender needed funds"That statement pretty much explains whats happening. It answers some of the questions that are rattling around in Tim's head. The lenders are caught in the crossfire too, unless they were being very cautious in recent years and didn't toss too much money into the sub prime mess. Now, their bad lending decisions have stripped them of their income and worse, they are looking at too high of ratios of loans out against their reserves. They have to either lower their non-performing loans, or bolster their reserves. Calling in the loans gives them cash for their reserves, or worse yet...cash to pay their bills! The lenders are also facing much tighter regulatory restrictions concerning appraisals. The lenders are not allowed to make contact with the appraisers to let them know what the loan amount is. This new era of "arms length" appraisals is killing a lot of deals. My MI realtor just had deal fall through on a property she was selling for her daughter. They appraised a 169k deal for 130k! This appraisal process will undoubtedly lead to much lower prices and loan amounts. Think about it....why should that daughter even bother listing her property at 169k if it's not going to appraise? The realtor also told me that the buyers are offering unbelievably low offfers and only want to look at foreclosures. The sharks are circling but I think we have another 30% to shed in MI! You guys everywhere else need to drop at least 50% before we see the upturn. With the price of oil drying up every last bit of spending money, expect that 50% drop to happen sooner, not later. Rent's are going to drop too. The guys holding too many notes will be glad to only bleed 25% of their note, thus undercutting the cash flow that "real" landlords need/want. Bob's next test date: 12/10/07
on my construction loan they took the appraisal... which was very conservitive (very) like 25% below market... which i understood... in today world i was fine with... then the bank discounted the appraisal by 16%... removed the value of the highest priced unit (1 of 20 unit) and then got their loan amount that had to be less than 60% ltv from this figure... so it was really like 35% LTV then... i had to put up (deposit) 9% of the loan amount in a fund in case i needed more funds...
oh well... what it is... interest rate is good... and i was lucky i had the other funds... but i could see where i could have hurt...
i don't want to do it again...
p
"on my construction loan they took the appraisal... which was very conservitive (very) like 25% below market... which i understood... in today world i was fine with... then the bank discounted the appraisal by 16%... removed the value of the highest priced unit (1 of 20 unit) and then got their loan amount that had to be less than 60% ltv from this figure... so it was really like 35% LTV then... i had to put up (deposit) 9% of the loan amount in a fund in case i needed more funds... "
You need another banker . Ive never heard of such a rip off . I had a banker I was solely using for everything and trusting a little too much as it turned out . He kept inching in demands and the rates inching up over prime. Sure the rate changes but he was increasing the distance . I took my sachel and visited every banker president in town. I laid my affairs on their table and asked what they could do for me ? The one I have now got on the hook. She made a play for the business and beat everyone else . The coffee is good there too.
Id leave her if I had to . It would be hard .
Tim
I was about to ditch em... i jumped thru more hoops for this loan than i ever have... even had to get a life insurance policy in case i croaked to cover them... ( a policy i will keep after the loan is paid off btw) but i got 1.4 million @ 5% interest only with the interest payments coming from the loan amount... so... not as suck a deal as it appears... construction loans are not the most easy things to get these days... most banks here are pull'n back big time... this is a smaller local bank so i'm in the hopes we'll do more later... this was my first deal with them... we'll see if it's the last
my other loans (commercial office & retail) were much more streamlined and few hoops to jump... but there was more documentation of the numbers than before...
i'm just glad it's done so i can get back to doing what i do... whatever that is...
you need to start your own mobil home park.... man the ROI on those puppies is huge... might be one of my next projects...
p
Its hard to keep up with where you are talking about but;
"Rent's are going to drop too. The guys holding too many notes will be glad to only bleed 25% of their note, thus undercutting the cash flow that "real" landlords need/want."
Contraire when people cant buy homes . The folks who have property to sell are the ones in disaster because normal folks cant buy them. Investors can buy them but if they dont pay out they are in disater too.
Of course I only know what I know around here . However when you have the problems you described you dont have the last one . Maybe I didnt inderstand .
This is a very strange time . Ive never seen anyting like it . Let me ramble about what Ive seen and heard the last few days trying to get an edge . Ive already shared parts of it .
For YEARS apartments took the back seat to houses . It was hard to keep 80 percent in multi apartment buildings. My broker told me she managed the biggest set of apartments in town and she had a waiting list of people wanting in. 30 percent of calls during the week are for people wanting rentals . On Saturday morning the calls average 60 percent . 75 percent of the calls want 3 bd but settle for 2. I logged 50 calls on the last house I rented after I ran a 6 dollar ad in the paper. There were 8 callers fighting over it arguing with me . DW took 3 callers who were pizzed off they didnt get it when she told them it had been rented.
Now, the people here are probably in worse shape than people yall cater too. They dont make a lot of money. They dont have high credit scores probably because they dont make enough money here to live as Larry mentioned about his renters. Considering the fuel prices and their gas and electric bills theres not enough money in the household. They dont have any money period. Then when loans got so hard to qualify for they are left in the cold buying one.
Heres my reality check Im dealing with in my world. Im renting to people making 8 to 10 bucks an hour . Takes two people working to pay rent . So thats 16 to 20 an hour per house hold. The average home price median in my area is 65,000 to 75,000 checking all the realators. All of them fall into that range. So it is so. I cant build them a house for that and provide the lot unless it was a shack . So when they buy they are usually buying older homes in need of repair . Dan T told yall when he visited me we had a lot of blue tarp roofs . Thats the way it is .
Now while its no trouble at all to rent a house it is hard to get a high price for it because they cant pay that either in rents. Its quite easy to break it down and I do just that . I take all the information for a credit check and dont bother doing it because I can see where they are at.
Im forced to buy at 50 to 60 percent loan to value and not do a lot of repair . Thats a tall order . Ive been looking for 30 days and havent found one so the old cliche I have of finding 1 out of 10 or 12 has been busted. Ive personally been on site of 50 to 60 that I actually got out of the car . I drove by a lot more . Im eating up a lot of time thats been wasted. Most of them I cant revive for the price difference . But thats what it takes to buy around here and rent it . Tough. Ive got my dobber down.
Tim
Rents are dropping because the money available to pay for rent is dropping. If I have $1000 note and don't want to lose everything, I can lease the house out for $700 and only lose $300. That buys me time before I lose everything. An investor knows he has to have cashflow and has to compete with non spophisticated landlords....the kind that will rent undermarket just to try to survive. On the other hand, if I was in a market that got 50 calls on a $6 ad, I'd raise the rent 30% to see if I could find a renter that was willing to pay the higher rent because of the supply and demand thing. I'd probably raise it so high that it wouldnt rent. Then, next week I'd lower it a bit...then a little bit more...until I got it right. But then again....I'm no landlord. Bob's next test date: 12/10/07
OK, I gotcha now .
Part of that solution is what you buy. If I had a house I was paying 1000 per month on Id be losing money too. This is a very good subject all by its self and I havent hardly touched on it .
When I look for rentals to buy I look at cap rates . The easiest way to do it or describe it is MY way. <G> Its pretty simple .
I go by sg ft price a house rents for and compare it . First off a 1000 dollar payment doesnt equal a rental here. But like you said if you were stuck on your own house then yes you got stuck but you didnt buy it to rent it out either. Mis fortune .
1100 sg ft rents for about 600, however Ive got a 924 renting for 450 . Thats about what Ive got in my fleet. 500 to 600 dollars catches most all of them. Tops on rents is about 750 but those dont cap well at 2,000 sg ft . Ive got one house that is 750 at 1400 sg ft. It woulnt bring a dime more if it was 1500. The best cap is the 924 @450.
Of course the cap rate is also figgued off of cost of the building for profit reasons. But thats where its illusionary. I disagree with that point so I dont use it . My reason is maintenence and materials . Smaller units are a lot cheaper to roof , paint , cool and heat and so forth to go the distance . Just floor covering is a massive cost over a five year period on bigger homes. People will settle for cheaper floor covering in cheaper rentals such as cermaic tile through out . Thus no replacement unless one cracks so buying a 100 extra tiles and storing them in the heat return for future use makes it easy and cheap. Store the same color grout in milk jugs in the return and your set. Just an example .
Tim
Man, you operate is such a different world than I do and we are doing simalar things .
I was shocked when my banker demanded 15 percent down on any price I paid reqardless of loan to value . It didnt set well so I went in to day to talk to her again.
One of two ways we worked it out . Well three actually.
1. when ballon loans come due I can up the amount off the old appraisel. KInd of her huh? hahaha. So I got 5 grand apeice off three today. No problem but its a higher rate than I was paying . Still very workable . I call this method harvesting the crop. It shows a loss borrowing money to offset the gains but actually Im getting paid. I havent touched those rentals so it was easy. Thers a lot left to borrow if I wanted to.
2. I can take out a construction loan for the whole deal. Say a house costs me 50 and I put 20 in it and it appraises for 95. She can still loan me 100 percent of a total of 70 grand.
3. I can take properties I own and ones thats got a lot of collateral worth and get a line of credit with her holding the paper on them. Thats for cash offers and auctions that require cash the day of sale. Thats been my best deals overall . Ive put the same house I already own up several times for cash. I keep a current app on it so they can hold the papers till I get it rolled over in financing .
Id like to have some of those Fema trailers in Hope Ar. I worked today on a plan to buy several small trailers . Set them up on land I own and rent them to HUD. No matter how big or how small HUD pays per bedroom. Im looking at 12 by 40 foot trailers @ 350 per month for a good cash flow. They pay the same for a house . <G>
Im gonna crunch the numbers on an RV park too. 300 per month on a bills paid lot with water , electric and sewer. Construction workers mainly short term. Ill call on all the construction sites and leave cards . I can get on Arkansas Natural site for around 100 per month and my city will handle the traffic on the internet . They will rent them for me online if I want to draw more tourists to town. They will take calls on their 800 number and answer questions . Free service.
Trying to move my checker somwheres since I cant sell anything .
Tim
High end real estate in the SF Bay Area is still chugging along, especially in the city. Large tract houses in outlying areas are sitting empty and dropping.
Mike
Trust in God, but row away from the rocks.
I live and work in Chicago...
and I rent. :D
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We build in the Chicago burbs and low and mid-range housing has fallen off the table. There is still some custom work.
However, "down town" Chicago housing has only shown a slow down in price increase but no practical slow down in demand. It's a desirable place for many to live. Remember there are over 171,000 millionaires in Cook County (Chicago) alone, 2nd highest in the U S and that doesn't count the adjoining collar counties.
Thats interresting Russ.
Larry and I live in adjoining areas to where we are discussing . Its different than where we live too.
Pretty cool hearing what its like different places. Seldom work for a millionare here . I think I remember MS saying he didnt work for mllionares either . That surprized me .
Tim
Re Chicagoland, here are the areas I am most familiar with, having friends and family there, and a lot of visits.
Crystal Lake, particularly the part of Lakewood along the south shore. Quite dead right now, except for the few highly sought-after lakefront lots.
Arlington Heights. Out near the big track. No go at all. My DW has a cousin we hang with when there, who lives in a 'hood of '60s and '70s homes all on one acre lots, where teardowns and to-the-lotlines McMansion specs were happening during the feeding frenzy. All dead now, with quite a few of those spec McMs unoccupied. Scary.
Bucktown, in the city. Balls-out big ticket development. Everybody's crazy, especially on a Friday night. And the new architecture blows me away. Rick Bayless, the celebrity chef and king of anything Mexican that you can eat, lives there. A lotta choices and stuff still going up if you've a few mil to blow. Shotgun teardowns for sale at nosebleed prices. Drugs still selling well on the corners after bedtime, at least when you get a block or two back from North Ave or Damon.
Lincoln Park near Clark and Fullerton. A great place to buy and flip a condo or townhome if you are financially savvy and creative. Parking? Forgettaboutit. This doesn't include the zoo. The apes have rent control, and they don't drive.
Evanston, near the lake and south of Northwestern U. Absolutely no decline at all in prices, and very few for sale signs, at least for the detached homes. I cannot call them single-family homes, because unless you have more than six kids all needing separate BRs, these circa 1910 and 1920 palaces are way too big. The only for sale signs are on those that look a little funky. The handsome ones probably get snapped up quick, if there is even a sign at all, and there are sure a lot of handsome ones. If you are gonna remodel there, you had better be good, and willing to deal with a his-and-her architect team. He sez this, she sez that.
My recommendation for a career path for someone wanting to begin anew? Become a reeeeeaaaaaalllllllly good painting contractor, doing the jobs on those huge old masterpieces up and down the lake in the north shore suburbs . . . Evanston, Wilmette, Winnetka, Lake Forest, keep going. Some of them are done up in as many as 15 separate colors, everyone gets a color consultant, everyone wants to outdo the job just finished two blocks south, and the jobs are detail, detail, detail. Go crazy. Learn to speak Spanish. Marry a Mexican girl and hire her whole family, then call out for more.
Hint on how to find where the money is. Look for the density of Whole Foods Markets. Evanston has two within six blocks of each other.
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"A stripe is just as real as a goddamn flower."
Gene Davis 1920-1985
I'm SW, Hinsdale, Burr Ridge, Western Springs, Palos South to Oak Brook North. The starter home stuff $250-$350K up to and including the semi customs $700-$900 are d-e-a-d. New customs $1M and over, there is still some activity. $1M and up specs very slow to sell and under heavy price haggling, absolutely no new starts. There's also still a little remodel and renovation work available. We have one custom we are waiting for plans to be completed and nothing else residential. Networking with past clients and friends has provided some small work and leads to keep some of my subs in food and payment money. But it is rough. Fuel is definitely become an issue, especially with the labor force, and for everyone else if for nothing other than feeling you're being gouged or taken advantage of.We do some commercial work too and that has marginally held up. I'm networking that too and it looks the most promising possibility short term. At that it's a depressing time here in the ole construction world, we've already lost some subs, contractors, even a few significant developers and it ain't over. And that's in a market that's in relatively good shape. How would you like to be in Florida or Vegas?Never serious, but always right.