Discussion in 'Trading' started by PohPoh, Sep 8, 2007.
is there a reason to be??
maybe after 2-3 months. house values might be almost on their way down. could be a nice opportunity.
They are just beginning to fall.
I don't see any reason for mass decreasing in population; other than deportation thousands of illegal immigrants; the housing will stabilize in coming year; i found the rental yield which is the best indicator of local real estates value.
I wish the price falls further so i can load up more nice rental properties; and just in time of welcoming immigrants; the real estates will nicely pop up.
A greater patience will be needed for playing real estates.
Where are people going to live? Under tents, canopies and tree branches?
Someday these idiots will have to go out and buy a roof. They will be forced to find shelter. They will be pressed hard to find a place of their own. Someday they will wake up and find their landlord in a muscle T shirt chasing 'em down the alley.
Absolutely not. I believe the hype for Real Estate has died off.
i think we have at least another year. prices still have'nt fallen enough. another thing to remember is loan standards are much tougher so those that may have normally qualified may have a much tougher time. lets not for get the psychological aspect of this as well with so many people reading about real estate turmoil they are going to hold out until the coast is clear button is pressed. we had 15 years of real estate gains in 4 years so the speculation was rampant. real estate is not liquid like stocks where all as it takes it to press your mouse and you sell something. do not kid yourselves into thinking its almost over,its only been a year and a half at most;we have another year or year and a half to go.
How does the income side of the deals look for investors now? Say I own a 2 BR middle class house in an average neighbourhood. Let's say this house has a value of $400k. What rent income could I generate annually, assuming I'll have it rented out 90% of the next 520 weeks. What does one usually deduct for maintenance, insurance and any other costs in a calculation like that? Maybe 5-7% of annual income?
In other words: How many years of income do you have to generate until the house returns its investment? Anything over 12 years is not a good investment in my book. Good deals are 8, 9 maybe 10 years or less. 5, 6 years I'd consider a steal, depending on the level of risk. This goes not only for real estate, but for any investment IMO (buying businesses, starting a franchise etc.).
IMO when looking at rents and looking from the income side you will always have a good idea of what a house should be worth. If the market is commanding higher prices than that, then don't buy (yet). If you find bargains at 6-8 times annual income then it might be a good deal.
generally speaking, SFRs in areas that have had good price appreciation are not gonna work as rentals. "generally," the rents are too low & the property taxes are generally pretty high. you are gonna pay +/-10% of collections for property management, and with professional management, your maint/repairs are gonna be higher if you dont do them yourself. also, one bad tenant can really junk your place in a hurry. paint, floor coverings, etc, and it can put you negative on the year, and thats w/o a mortgage. ive made money on SFRs, but only with GIMs of 4x-7x, and i doubt your are seeing those anytime soon in areas you might like to buy. MFDs tend to have lower GIMs and lower tax basis per unit.
in the past year i sold a place for just under $300k that rented for less than $15,000 per year.
BTW, real estate markets generally do not correct in 3-6 months. im not in any hurry.
Real Estate will just keep falling. As the economy falls further then layoffs will increase and the pace of hiring will decrease. Raises will be put on hold.
If you use the charts CFC and KBH as guides, then we probably have much further to fall. I say CFC will eventually trade in the high single digits where as KBH will probably be the same. I surmise that their charts will eventually resemble that of tech stocks from the year 2000.
The "low" for housing probably will not come for many many years and prices will fall back to 1999 levels. That $400,000 house will soon be selling for $175k again.
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