Bubble Bursting?
I have been searching for a multi-family in the Springfield, MA area as a first step in real estate investing, but I'm beginning to worry that my timing is all wrong. Are we at the very height of real estate prices, and at the beginning of a slump in rental prices?
Quote:
On 2003-11-30 11:09, redknight83 wrote:
Remember:
The quickest way to get out of this business is negative cashflow.
Also, remember to buy it at what it's worth today. If the owner tells you it's worth more because of undermarket rents, tell him to increase the rents and increase his price. Buy the property as-is for CURRENT market value with PRESENT information, not based on FUTURE speculations.
Good luck,
John
Better to buy for what it was worth in the past.
Jyl,
Times are tough BUT when economy will recover (and it will) and interest rates will go up (and they will) so will go up the demand for multiunit real estate. To you as investor that means less multiunit properties sold for higher price. So then you will think to yourself "I should've bought that apartment building X month ago, now prices are up and timing is bad"
The point I am trying to make is its ALWAYS good time to invest as long as you buy right.
As Robert Kiyosaki said "Your profit is made when you buy, not when you sell". In any economy you can find motivated sellers who will sell below FMV (fair market value) because they need cash, getting divorced, moving or just want out.
Every time you buy income producing property below it's FMV you allow yourself to not increase or even decrease (if needed) your rent rates and still make some money if vacancy rate in your area will go up.
Now about Bubble Burst.
Please someone correct me if I am wrong but I truly believe if Bubble will burst it will touch overpriced properties but a regular 2Br/1Ba apartment building where a low+ income family lives will always have tenants. As a said earlier you might have to decrease your rent roll and hence you income to keep that building going through rough times, however you should be OK as long as you property cash flows.
Good Luck!
Alex
In 1933, the banks closed by order of the Federal Government. There was no money and overnight we turned to the media of exchange. Also some brave souls extended credit and the interchange of rough notes became a common policy.
We rented in Beverly Hills a 3 br 1.5ba apartment for $68. a month. When you moved in you got two free months when you paid your first months rent.
Yes it is true we moved every three months when our free time had expired. This made it possible to attend in rather rapid succession all of the four grammer schools in Beverly Hills.
My sainted Grandfather moved out to Calif to be near his very strange children. He had just gone Short in the Crash of 1929 and was loaded. Upon his arrival he bought this particular little six unit apartment house for $6,000 total. He also escrowed, did the title search everything himself to save money. The nice man who sold him the building shot himself six months latter. No not about the building but because he had not been trained as you all have that it matters not what the hell is going on as long as you can Negotiate.
Do any of you know what is a Luft Mench? In every Concentration camp that I ever liberated there was always one inmate,prisoner, who was well dressed, well feed, wore two watches and smoked a big cigar. This charming gentlemen was the Luft Mench. The man who deals in air. The transactor, The Neogiator. If you were a guard and you needed something. Ein Mench got it for you. If you were a prisoner and had a need for something and had something of value, why the Mench got it for you.
Now those were extreme times, to survive you needed a skill and what was that skill? Negotiation.
Of course not all of us learn this overnight. I used to borrow my Grandfathers Rolls and go trolling in front of Hollywood High School. It did not work for me all I got was a clod of dirt thrown at the car. And that clod of dirt thrown by a very attractive girl is what first brought my attention to real estate, land, er dirt. I was hooked. To hell with the girl it was the dirt that I brought home.
Confused Lucius
Man Lucius I browse this board just looking for your entertaining post. Keep it up!!!
My advice....
If it doesn't cashflow (or the margins are too slim) don't buy it.
If you're going to be in it for at least 10 years, you'll be fine after that, even if you buy when the market is high.
You may want to consider short-term investing for a bit (rehabs, sub. to's, flipping contracts) until the market softens, as you say it is.
Remember:
The quickest way to get out of this business is negative cashflow.
Also, remember to buy it at what it's worth today. If the owner tells you it's worth more because of undermarket rents, tell him to increase the rents and increase his price. Buy the property as-is for CURRENT market value with PRESENT information, not based on FUTURE speculations.
Good luck,
John
Jyl,
I am from Mass and have been doing rehabs there for 8 months. In my opinion Springfield is a good place to invest and I am not worried at all about declining values. If you look at Springfield as it compares to any other city in the state it is by far the cheapest place to buy multi's and the market average rents allow for good cash flow. Springfield in my opinion has hit the bottom of the recession and won't go any lower. There also seems to be alot of props on the market that don't get bought up quick so there is potential to shop around and make offers and feel out for motivated sellers. I am ot sure of the vacancy rates currently but I would go for fully rented props as I think you can throw out some offers and get a good deal. Just be patient and don't buy just because you feel you need to. If you are interested in talking further about our local area and the possibilities in working together send me a prviate message
TBARBER
Hey Jyl
I use to live in Springfield, MA and now live in Florida.
I have a friend thats up there buying properties, especially multi-units. He buys them and fixes them up.
Try getting a database that allows you to know when "Notice of Defaults" are filed or just go to the courthouse to look it up. This way you can get an idea of whats going on. There is a publication that I had a subscription to that had all the info that you would need in regards to notice of default, foreclosure sales, and real estate owned by the bank. It's called "bankers and tradesman." Good info to have.
The market is a little slow but there are still deals to be had. You just have to keep your third eye open and your ear to the ground for those hard to find deals. The economy is slow, and people are still loosing their homes (due to foreclsoure) so you can still get in the game, it will just be at a slower pace.
Just be prepared when a deal comes.
"it's better to be prepared for an opportunity and not have one, then to have an opportunity and not be prepared"