Good Resource For Historical Data On Past RE Trends
Hi,
I have recently gone through Scott Scheel’s commercial RE course and feel that I’ve learned a lot. However, its one thing to learn that cap rates dip during a recessionary period, or that the different commercial sectors do NOT follow the same cycle, and quite another thing to examine and absorb knowledge from the raw data myself.
I want to see historical data for the last 50-100 years on:
-Real estate cycles by sector
-Where cap rates have been in the past
-Historical interest rates
-The effects of these on each other
-Qualititative factors if possible (ie investor attitudes at the time)
I want to see this data for local markets if possible.
What sources do you guys use to find this historical information?
According to Robert Shiller, arguably the leading authority on historical real estate data, in Irrational Exuberance (pg 12) regarding the long history of home prices, "...it appears that no such long series of home prices for any country has ever been published. No real estate professional I talked with could refer me to one." And commercial data may be even harder to find. Good luck.
I would be very leery of zillow numbers. Around here, they are very unpredictable. Some are spot on, many are completely inaccurate as far as the "Zestimate." Examples: $29,500 and $34,000 closings in $60K area, zillow Zestimates are $96,500 and $99,500.
Real estate markets are local. The discount from list price for my Frederick MD market is probably not the same for your market.
Contact one of your friendly local real estate agents and ask for a trend report from the MLS. Ask if the system can tell you what the average sale price was for the month of March as a percentage of the average list price. For my market here in Frederick, MD it was 86.79% for March 2009, down from 89.11% in March 2008.
For california try dataquick
I think it is really hard for us to help given the limited information, because there are many variables. Here are some quick thoughts that might help...
Especially in a declining market, there is a preference for comps that are less than a month old, then to three, and pushing to 6 months is painful. If a comp is, say, 6-months old and the market has been dropping 2% per month, you could easily see a smaller home be considered worth more than the larger home. Active listings "define" the upper end of the market. If there are other active listings, say for a 2400 sf house, for the same price or less than your 2100 sf house, the sold comps may have to be given less weight because the current market is saying that the home is worth less.
You might also check sites like FinestExpert or cyberhomes or homegain to get a sense of prices. These is no way compare with a good appraisal, but they might give you some insights - by looking at what they consider to be comps.
HI Josh,
Try some of your small local banks. Ask about a line of credit where the houses aquired would then be secured and the loan would work like a blanket loan. Make sure the houses can be released as they are sold. These loan officers need to make money, so talk to them and join some of the same local business associations if you have not already. Show them you know what you are doing and have a long term plan.
You should be operating under some sort of porotection (LLC,Corp, etc) and hopefully you are, but this puts you into a different league.
Hope this helps
>You are just simply asking the wrong questions when you call the banks. Try a cashout refi on the paid off house... Not a heloc... helocs are a thing of the past... go up to the max that the bank will let you borrow --80% LTV or so (or as high as you can without compromising your cashflow).
>Then get financing on the properties you buy and put down 50% on each property till you run out of cash.
>Find a Loan officer who is seasoned in investing specifically. One who is, himself, an investor also.
>Also, check into Subject-to (I would start here)... start marketing to people who have equity and wanna sell quick or need to sell quick.
How well do you know the area? Are there any universities or big job providers near by?
Also, I would go to a local landlord meeting and ask around.
And http://www.mapskrieg.com might be helpful. It maps out where all the rental housing is on craigslist. If your place is in a area of high concentration it could be a good sign.
I think you are properly laying out the parameters. Now... all you have to do is follow thru...and DO IT.
[addsig]
if the cost of owning is very close to the revenue generated from the rental, they the deal is too tight do to potential vacancies.
You can evaluate rent vs buy by using a tool like FinestExpert which is designed for investors to find cash flow positive properties. If it is cash positive, then it is good for the owner. After you weigh in the transaction costs, those would be possible buy signals. However, if the property is negative cash flow, then it is definitely far better to rent.
In picking out an area, you want want one that has not become a "declining marketplace" hit hard by the recession.
Areas in Texas have not been hard by the recession. Their only problem is the they do not appreciate in values like they do in California.
Start out with SFR, duplexes and triplexes or quadraplexes.
I have done the home work on quadraplexes and found that you can get good financial results without a lot of cash outlay. Also when financing them they come under residential rules not commercial rules. Lower down payments and qualifications.
Marian Thomas
[addsig]
I agree that gurus and those "experts" really do not have the key. You have the key. You must know how much "risk" you can take and for how long.
But as a beginner, you want to make money on your first deal so that you continue to do more deals. Although Chicago is a great area the beginner can not normally put all his money into one deal and then take too long to change it around.
But do not give up, do your own homework and you will find the answers.
Marian Thomas
[addsig]